SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 28, 2000
Residential Asset Securities Corporation (as company under a Pooling and
Servicing Agreement dated as of February 1, 2000 providing for, inter alia, the
issuance of Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2000-KS1)
Residential Asset Securities Corporation
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 333-84939 75-2006294
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(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
8400 Normandale Lake Blvd., Suite 600, Minneapolis, MN 55437
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (612) 832-7000
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Exhibit Index Located on Page 2
<PAGE>
Items 1 through 6 and Item 8 are not included because they are not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable
(b) Not applicable
(c) Exhibits (executed copies) - The following execution copies of
Exhibits to the Form S-3 Registration Statement of the Registrant are hereby
filed:
Sequentially
Numbered
Exhibit Exhibit
NUMBER PAGE
10.1 Pooling and Servicing Agreement, dated as of February 1, 2000 among
Residential Asset Securities Corporation, as company, Residential Funding
Corporation, as master servicer, and Bank One, National Association, as
trustee.
10.2Certificate Guaranty Insurance Policies issued by Ambac Assurance
Corporation in connection with the Residential Asset Securities Corporation,
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2000-KS1, Class A Certificates.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RESIDENTIAL ASSET SECURITIES CORPORATION
BY:
Name: Stephen Hynes
Title: Vice President
Dated: March 8, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RESIDENTIAL ASSET SECURITIES CORPORATION
BY: /S/ STEPHEN HYNES
Name: Stephen Hynes
Title: Vice President
Dated: March 8, 2000
<PAGE>
Exhibit 10.1
Pooling and Servicing Agreement
EXECUTION COPY
===============================================================================
RESIDENTIAL ASSET SECURITIES CORPORATION,
Depositor,
RESIDENTIAL FUNDING CORPORATION,
Master Servicer,
and
BANK ONE, NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2000
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2000-KS1
===============================================================================
<PAGE>
This Pooling and Servicing Agreement, effective as of February 1,
2000, among RESIDENTIAL ASSET SECURITIES CORPORATION, as the depositor (together
with its permitted successors and assigns, the "Depositor"), RESIDENTIAL FUNDING
CORPORATION, as master servicer (together with its permitted successors and
assigns, the "Master Servicer"), and BANK ONE, NATIONAL ASSOCIATION, a national
banking association, as trustee (together with its permitted successors and
assigns, the "Trustee"),
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in twelve classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Mortgage Loans (as defined herein). As provided herein, the Master Servicer
will make an election to treat the entire segregated pool of assets relating to
the Group I Loans, as described in the definition of REMIC I below, as a real
estate mortgage investment conduit (a "REMIC") for federal income tax purposes,
and such segregated pool of assets will be designated as "REMIC I." The Class
R-I Certificates will represent the sole class of "residual interests" in REMIC
I for purposes of the REMIC Provisions (as defined herein) under federal income
tax law. Section 1.03 irrevocably sets forth the designation, the REMIC I
Remittance Rate, the initial Uncertificated Balance, and solely for purposes of
satisfying Treasury Regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I Regular Interests. None of the REMIC I
Regular Interests will be certificated.
As provided herein, the REMIC Administrator will make an election to
treat the entire segregated pool of assets relating to the Group II Loans, as
described in the definition of REMIC II, as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC II." The Class R-II Certificates will
represent the sole class of "residual interests" in REMIC II for purposes of the
REMIC Provisions under federal income tax law. Section 1.03 irrevocably sets
forth the designation, the REMIC II Remittance Rate, the initial Uncertificated
Balance, and solely for purposes of satisfying Treasury Regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
II Regular Interests. None of the REMIC II Regular Interests will be
certificated.
As provided herein, the REMIC Administrator will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests and REMIC
II Regular Interests as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as REMIC III. The Class R-III
Certificates will represent the sole class of "residual interests" in REMIC III
for purposes of the REMIC Provisions under federal income tax law. The following
table irrevocably sets forth the designation, Pass-Through Rate and initial
Certificate Principal Balance for each of the "regular interests" in REMIC III
(the "REMIC III Regular Interests"). The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) for each REMIC III Regular Interest shall be the
Distribution Date in February 2035.
<TABLE>
<CAPTION>
AGGREGATE
INITIAL
PASS CERTIFICATE
THROUGH PRINCIPLE DISTRIBUTION INITIAL RATINGS
DESIGNATION TYPE RATE BALANCE FEATURES DATE S&P FITCH
- ----------- ---- -------------------- ------------------------------ --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-I-1 Senior 7.615% $220,000,000 Senior December 25, AAA AAA
2014
Class A-I-2 Senior 7.700% $100,000,000 Senior May 25, 2021 AAA AAA
Class A-I-3 Senior 7.735% $105,000,000 Senior October 25, AAA AAA
2025
Class A-I-4 Senior 8.040% $105,000,000 Senior October 25, AAA AAA
2028
Class A-I-5 Senior 8.195% $55,000,000 Senior February 25, AAA AAA
2031
Class A-I-6 Senior 7.905% $65,000,000 Lockout/SeniorFebruary 25, AAA AAA
2031
Class A-II Senior Adjustable$750,000,000 Senior February 25, AAA AAA
Rate 2031
Class SB-I Subordinate NA $312.33 Subordinate February 25, N/A N/A
2031
Class SB-II Subordinate NA $3,262.36 Subordinate February 25, N/A N/A
2031
</TABLE>
The Mortgage Loans have an aggregate Cut-off Date Principal Balance
equal to $1,400,003,574. The Mortgage Loans are comprised of two Loan Groups.
The Group I Loans are fixed-rate first and junior lien mortgage loans having
terms to maturity at origination or modification of not more than 30 years and
the Group II Loans are adjustable rate first lien mortgage loans having terms to
maturity at origination or modification of not more than 30 years.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION. 1.01. DEFINITIONS Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
ACCRUED CERTIFICATE INTEREST: With respect to each Distribution
Date, as to any Class A Certificate, interest accrued during the related
Interest Accrual Period at the related Pass-Through Rate on the Certificate
Principal Balance thereof immediately prior to such Distribution Date in each
case reduced by (i) the interest portion (adjusted to the Net Mortgage Rate (or
the Modified Net Mortgage Rate in the case of a Modified Mortgage Loan)) of
Realized Losses with respect to Mortgage Loans in the related Loan Group
(including Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses and Extraordinary Losses) not allocated to one or more specific Classes
of Certificates pursuant to Section 4.05, (ii) the interest portion of Advances
with respect to the related Loan Group previously made with respect to a
Mortgage Loan or REO Property which remained unreimbursed following the Cash
Liquidation or REO Disposition of such Mortgage Loan or REO Property that were
made with respect to delinquencies that were ultimately determined to be Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
Extraordinary Losses and (iii) any other interest shortfalls with respect to the
related Loan Group not covered by the subordination provided by the Class SB
Certificates, including interest that is not collectible from the Mortgagor for
the related Due Period pursuant to the Relief Act or similar legislation or
regulations as in effect from time to time (but without reduction for any Group
I Prepayment Interest Shortfalls, Group II Prepayment Interest Shortfalls or
Class A-II Basis Risk Shortfalls), with all such reductions allocated among all
of the Class A-I Certificates in the case of any of such reductions that derive
from Loan Group I, in proportion to their respective amounts of Accrued
Certificate Interest which would have resulted absent such reductions, and among
all of the Class A-II Certificates in the case of any of such reductions that
derive from Loan Group II, in proportion to their respective amounts of Accrued
Certificate Interest which would have resulted absent such reductions. Accrued
Certificate Interest will be calculated on the Fixed Rate Certificates on the
basis of a 360-day year consisting of twelve 30-day months, and on the
Adjustable Rate Certificates on the basis of the actual number of days in the
related Interest Accrual Period and a 360-day year. With respect to each
Distribution Date and the Class SB Certificates, calculated as provided in
Section 1.03 hereof.
ADJUSTABLE GROUP II LOAN : Each Mortgage Loan in Group II, the
interest rate on which is not fixed for the life of such Mortgage Loan.
ADJUSTABLE RATE CERTIFICATES: The Class A-II Certificates.
ADJUSTED MORTGAGE RATE: With respect to any Mortgage Loan and any
date of determination, the Mortgage Rate borne by the related Mortgage Note,
less the rate at which the related Subservicing Fee accrues.
ADJUSTMENT DATE: As to each Adjustable Group II Loan, each date set
forth in the related Mortgage Note on which an adjustment to the interest rate
on such Mortgage Loan becomes effective.
ADVANCE: As to any Mortgage Loan, any advance made by the Master Servicer,
pursuant to Section 4.04.
AFFILIATE: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution Date and
each Loan Group, the total of the amounts held in the Custodial Account at the
close of business on the preceding Determination Date on account of (i)
Liquidation Proceeds, Insurance Proceeds, Principal Prepayments, Mortgage Loan
purchases made pursuant to Section 2.02, 2.03, 2.04, 3.21 or 4.07 and Mortgage
Loan substitutions made pursuant to Section 2.03 or 2.04 received or made in the
month of such Distribution Date (other than such Liquidation Proceeds, Insurance
Proceeds and purchases of Mortgage Loans that the Master Servicer has deemed to
have been received in the preceding month in accordance with Section 3.07(b))
and (ii) payments which represent early receipt of scheduled payments of
principal and interest due on a date or dates subsequent to the Due Date in the
related Due Period, in each case with respect to the Mortgage Loans in the
related Loan Group.
APPLICABLE SPREAD: With respect to the Class A-II Certificates,
0.26% per annum, (or 0.52% per annum on each Distribution Date following the
Loan Group II Optional Termination Date).
APPRAISED VALUE: As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the
time of the origination of the related Mortgage Loan, and (ii) the sales price
of the Mortgaged Property at such time of origination, except in the case of a
Mortgaged Property securing a refinanced or modified Mortgage Loan as to which
it is either the appraised value based upon the appraisal made at the time of
origination of the loan which was refinanced or modified or the appraised value
determined in an appraisal at the time of refinancing or modification, as the
case may be.
ASSIGNMENT: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law and accompanied by an Opinion of Counsel to that effect.
ASSIGNMENT AGREEMENT: The Assignment and Assumption Agreement, dated
the Closing Date, between Residential Funding and the Depositor relating to the
transfer and assignment of the Mortgage Loans.
AVAILABLE DISTRIBUTION AMOUNT: As to any Distribution Date and each
Loan Group, an amount equal to (a) the sum of (i) the amount relating to the
Mortgage Loans on deposit in the Custodial Account as of the close of business
on the immediately preceding Determination Date and amounts deposited in the
Custodial Account in connection with the substitution of Qualified Substitute
Mortgage Loans, (ii) the amount of any Advance made on the immediately preceding
Certificate Account Deposit Date, (iii) any amount deposited in the Certificate
Account on the related Certificate Account Deposit Date pursuant to the second
paragraph of Section 3.12(a), (iv) any amount that the Master Servicer is not
permitted to withdraw from the Custodial Account pursuant to Section 3.16(e) and
(v) any amount deposited in the Certificate Account pursuant to Section 4.07 or
9.01, reduced by (b) the sum as of the close of business on the immediately
preceding Determination Date of (w) aggregate Foreclosure Profits, (x) the
Amount Held for Future Distribution, (y) amounts permitted to be withdrawn by
the Master Servicer from the Custodial Account in respect of the Mortgage Loans
pursuant to clauses (ii)-(x), inclusive, of Section 3.10(a) and (z) the
Certificate Insurer Premium payable on such Distribution Date, in each case with
respect to the related Loan Group.
BANKRUPTCY AMOUNT: As of any date of determination and with respect
to each of Loan Group I and Loan Group II, an amount equal to the excess, if
any, of (A) $257,380 and $357,013, respectively, over (B) the aggregate amount
of Bankruptcy Losses with respect to the related Loan Group allocated to the
Class SB Certificates or the Loan Group I Excess Cash Flow or Loan Group II
Excess Cash Flow in accordance with Section 4.05. The Bankruptcy Amount for any
Loan Group may be further reduced by the Master Servicer (including accelerating
the manner in which such coverage is reduced) provided that prior to any such
reduction, the Master Servicer shall (i) obtain written approval from the
Insurer and written confirmation from each Rating Agency that such reduction
shall not reduce the rating assigned to any Class of Certificates by such Rating
Agency below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency without taking into
account the related Policy, and (ii) provide a copy of such written confirmation
to the Trustee and the Insurer.
BANKRUPTCY CODE: The Bankruptcy Code of 1978, as amended.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, a Deficient
Valuation or DEBT SERVICE REDUCTION; PROVIDED, HOWEVER, that neither a Deficient
Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy Loss
hereunder so long as the Master Servicer has notified the Trustee and the
Insurer in writing that the Master Servicer is diligently pursuing any remedies
that may exist in connection with the representations and warranties made
regarding the related Mortgage Loan and either (A) the related Mortgage Loan is
not in default with regard to payments due thereunder or (B) delinquent payments
of principal and interest under the related Mortgage Loan and any premiums on
any applicable primary hazard insurance policy and any related escrow payments
in respect of such Mortgage Loan are being advanced on a current basis by the
Master Servicer or a Subservicer, in either case without giving effect to any
Debt Service Reduction.
BASIS RISK RESERVE FUND: The separate Eligible Account created and
maintained with the Trustee pursuant to Section 5.07 hereof.
BASIS RISK SHORTFALL: With respect to the Class A-II Certificates,
the amount by which the Accrued Certificate Interest, calculated at a rate equal
to One-Month LIBOR plus the Applicable Spread, exceeds the Accrued Certificate
Interest on the Class A-II Certificates, calculated at the then-applicable
Pass-Through Rate.
BOOK-ENTRY CERTIFICATE: Any Certificate registered in the name of the
Depository or its nominee.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in the State of New York, the State of
Michigan, the State of California or the State of Illinois (and such other state
or states in which the Custodial Account or the Certificate Account are at the
time located) are required or authorized by law or executive order to be closed.
BUYDOWN FUNDS: Any amount contributed by the seller of a Mortgaged
Property, the Depositor or other source in order to enable the Mortgagor to
reduce the payments required to be made from the Mortgagor's funds in the early
years of a Mortgage Loan. Buydown Funds are not part of the Trust Fund prior to
deposit into the Custodial or Certificate Account.
BUYDOWN MORTGAGE LOAN: Any Mortgage Loan as to which a specified
amount of interest is paid out of related Buydown Funds in accordance with a
related buydown agreement.
CASH LIQUIDATION: As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
CERTIFICATE: Any Class A Certificate, Class SB Certificate or Class R
Certificate.
CERTIFICATE ACCOUNT: The account or accounts created and maintained
pursuant to Section 4.01, which shall be entitled "Bank One, National
Association, as trustee, in trust for the registered holders of Residential
Asset Securities Corporation, Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2000-KS1" and which must be an Eligible Account. Any such
account or accounts created and maintained subsequent to the Closing Date shall
be subject to the approval of the Insurer, which approval shall not be
unreasonably withheld.
CERTIFICATE ACCOUNT DEPOSIT DATE: As to any Distribution Date, the Business
Day prior thereto.
CERTIFICATEHOLDER OR HOLDER: The Person in whose name a Certificate
is registered in the Certificate Register, except that neither a Disqualified
Organization nor a Non-United States Person shall be a holder of a Class R
Certificate for any purpose hereof. Solely for the purpose of giving any consent
or direction pursuant to this Agreement, any Certificate, other than a Class R
Certificate, registered in the name of the Depositor, the Master Servicer or any
Subservicer or any Affiliate thereof shall be deemed not to be outstanding and
the Percentage Interest or Voting Rights evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
or Voting Rights necessary to effect any such consent or direction has been
obtained. All references herein to "Holders" or "Certificateholders" shall
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and participating members thereof, except as
otherwise specified herein; PROVIDED, HOWEVER, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register. Unless
otherwise indicated in this Agreement, the Custodial Agreement or the Assignment
Agreement, whenever reference is made to the actions taken by the Trustee on
behalf of the Certificateholders, such reference shall include the Insurer as
long as there is no Insurer Default continuing.
CERTIFICATE INSURER PREMIUM: The premium payable to the Insurer on
each Distribution Date in an amount equal to one-twelfth of the product of the
Certificate Insurer Premium Rate and the Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date.
CERTIFICATE INSURER PREMIUM RATE: The per annum rate specified in the
Insurance Agreement for the purpose of calculating the Certificate Insurer
Premium.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate, as reflected on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent, if any, and otherwise on the books of a Depository
Participant, if any, and otherwise on the books of the Depository.
CERTIFICATE PRINCIPAL BALANCE: With respect to each Class A
Certificate, on any date of determination, an amount equal to (i) the initial
Certificate Principal Balance of such Certificate as specified on the face
thereof, minus (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
(including such amounts paid pursuant to the related Policy) to reduce the
Certificate Principal Balance thereof pursuant to Section 4.02(c) and (y) the
aggregate of all reductions in Certificate Principal Balance deemed to have
occurred in connection with Realized Losses that were previously allocated to
such Certificate (or any predecessor Certificate) pursuant to Section 4.05
(other than any such amounts included in an Insured Amount paid pursuant to the
related Policy). With respect to each Class SB-I Certificate, on any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Stated Principal
Balance of the Group I Loans over (B) the then aggregate Certificate Principal
Balance of all Class A-I Certificates then outstanding. With respect to each
Class SB-II Certificate, on any date of determination, an amount equal to the
Percentage Interest evidenced by such Certificate times the excess, if any, of
(A) the then aggregate Stated Principal Balance of the Group II Loans over (B)
the then aggregate Certificate Principal Balance of all Class A-II Certificates
then outstanding.
CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR: The register maintained and
the registrar appointed pursuant to Section 5.02.
CLASS: Collectively, all of the Certificates bearing the same designation.
CLASS A CERTIFICATE: Any one of the Class A-I Certificates or Class A-II
Certificates.
CLASS A-I CERTIFICATE: Any one of the Class A-I-1, Class A-I-2,
Class A-I-3, Class A-I-4, Class A-I-5 or Class A-I-6 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A-1, senior to the Class SB-I and Class R
Certificates with respect to distributions and the allocation of Realized Losses
in respect of Loan Group I as set forth in Section 4.05, and evidencing an
interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions.
CLASS A-I-6 LOCKOUT DISTRIBUTION AMOUNT: For any Distribution Date,
the lesser of (a) the product of (i) the Class A-I-6 Lockout Percentage for such
Distribution Date and (ii) the Class A-I-6 Lockout Pro Rata Distribution Amount
for such Distribution Date and (b) the Principal Distribution Amount for Loan
Group I:
CLASS A-I-6 LOCKOUT PERCENTAGE: For each Distribution Date shall be as
follows:
LOCKOUT
PAYMENT DATES PERCENTAGE
March 2000 through February 2003............................. 0%
March 2003 through February 2005............................. 45%
March 2005 through February 2006............................. 80%
March 2006 through February 2007............................. 100%
March 2007 and thereafter.................................... 300%
CLASS A-I-6 LOCKOUT PRO RATA DISTRIBUTION AMOUNT: For any
Distribution Date, an amount equal to the product of (x) a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-I-6
Certificates immediately prior to such Distribution Date and the denominator of
which is the aggregate Certificate Principal Balance of the Class A-I
Certificates immediately prior to such Distribution Date and (y) the Principal
Distribution Amount with respect to Loan Group I for such Distribution Date.
CLASS A-I PERCENTAGE: With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Certificate Principal Balance of the Class A-I Certificates and the denominator
of which is the aggregate Stated Principal Balance of the Group I Loans (or
related REO Properties), in each case prior to giving effect to distributions to
be made on such Distribution Date.
CLASS A-II BASIS RISK SHORTFALLS: With respect to any Distribution
Date and the Class A-II Certificates, the amount by which (i) the Unadjusted
Accrued Certificate Interest on the Class A-II Certificates for such
Distribution Date exceeds (ii) the Accrued Certificate Interest on the Class
A-II Certificates for such Distribution Date.
CLASS A-II CERTIFICATE: The Class A-II Certificate executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form
annexed hereto as Exhibit A-1, senior to the Class SB-II Certificates and Class
R Certificates with respect to distributions and the allocation of Realized
Losses in respect of Loan Group II as set forth in Section 4.05, and evidencing
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions.
CLASS A-II PERCENTAGE: With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Certificate Principal Balance of the Class A-II Certificates and the denominator
of which is the aggregate Stated Principal Balance of the Group II Loans (or
related REO Properties), in each case prior to giving effect to distributions to
be made on such Distribution Date.
CLASS R CERTIFICATE: Any one of the Class R-I, Class R-II or Class R-III
Certificates.
CLASS R-I CERTIFICATE: Any one of the Class R-I Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit B and evidencing an interest
designated as a "residual interest" in REMIC I for purposes of the REMIC
Provisions.
CLASS R-II CERTIFICATE: Any one of the Class R-II Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit B and evidencing an interest
designated as a "residual interest" in REMIC II for purposes of the REMIC
Provisions.
CLASS R-III CERTIFICATE: Any one of the Class R-III Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit B and evidencing an interest
designated as a "residual interest" in REMIC III for purposes of the REMIC
Provisions.
CLASS SB CERTIFICATE: Any one of the Class SB-I or Class SB-II
Certificates.
CLASS SB-I CERTIFICATE: Any one of the Class SB-I Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A-2, subordinate to the
Class A-I Certificates with respect to distributions and the allocation of
Realized Losses in respect of Loan Group I as set forth in Section 4.05, and
evidencing ownership of interests designated as a "regular interest" in REMIC
III for purposes of the REMIC Provisions.
CLASS SB-II CERTIFICATE: Any one of the Class SB-II Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A-2, subordinate to the
Class A-II Certificates with respect to distributions and the allocation of
Realized Losses in respect of Loan Group II as set forth in Section 4.05, and
evidencing ownership of interests designated as "regular interests" in REMIC III
for purposes of the REMIC Provisions.
CLOSING DATE: February 28, 2000.
CODE: The Internal Revenue Code of 1986, as amended.
COMBINED LOAN-TO-VALUE RATIO: The ratio, expressed as a percentage,
equal to the sum of (i) the Cut-off Date Principal Balance of such Junior
Mortgage Loan and (ii) the principal balance of any related mortgage loans that
constitute liens senior to the lien of the Junior Mortgage Loan on the related
Mortgaged Property, at the time of the origination of such Junior Mortgage Loan
(or, if appropriate, at the time of an appraisal subsequent to origination), to
the lesser of (A) the appraised value of the related Mortgaged Property
determined in the appraisal used in the origination of such Junior Mortgage Loan
(or, if appropriate, the value determined in an appraisal obtained subsequent to
origination) and (B) if applicable under the corresponding program, the sales
price of each Mortgaged Property.
COMPENSATING INTEREST: With respect to any Distribution Date and
each Loan Group, an amount equal to Prepayment Interest Shortfalls resulting
from Principal Prepayments in Full or Curtailments during the related Prepayment
Period, but not more than the lesser of (a) one-twelfth of 0.125% of the Stated
Principal Balance of the Mortgage Loans immediately preceding such Distribution
Date and (b) the sum of the Servicing Fee, all income and gain on amounts held
in the Custodial Account and the Certificate Account and payable to the
Certificateholders with respect to such Distribution Date and servicing
compensation to which the Master Servicer may be entitled pursuant to Section
3.10(a)(v) and (vi), in each case with respect to the related Loan Group;
provided that for purposes of this definition the amount of the Servicing Fee
will not be reduced pursuant to Section 7.02 except as may be required pursuant
to the last sentence of such Section.
CONVERTED MORTGAGE LOAN: A Convertible Mortgage Loan with respect to which
the Mortgagor has exercised the conversion option.
CONVERTIBLE MORTGAGE LOAN: An Adjustable Group II Loan the terms of
which permit the Mortgagor to convert the Mortgage Rate thereon from an
adjustable rate to a fixed rate subject to the conditions set forth in the
related Mortgage Note.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which at any
particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at 1 Bank One Plaza, Suite 0126, Chicago, Illinois
60670-0126, Attention: Residential Funding
Corporation Series 2000-KS1.
CUMULATIVE LOSS PERCENTAGE: As to either Loan Group, the percentage set
forth below for the Distribution Date in the applicable month after the Closing
Date:
MONTH LOAN GROUP I LOAN GROUP II
24 0.75% 1.00%
25-30 1.25% 1.75%
31-36 1.75% 2.50%
37-42 2.25% NA
CURTAILMENT: Any Principal Prepayment made by a Mortgagor which is not a
Principal Prepayment in Full.
CUSTODIAL ACCOUNT: The custodial account or accounts created and
maintained pursuant to Section 3.07 in the name of a depository institution, as
custodian for the holders of the Certificates and for the Insurer, for the
holders of certain other interests in mortgage loans serviced or sold by the
Master Servicer and for the Master Servicer, into which the amounts set forth in
Section 3.07 shall be deposited directly. Any such account or accounts shall be
an Eligible Account.
CUSTODIAL AGREEMENT: An agreement that may be entered into among the
Depositor, the Master Servicer, the Trustee and a Custodian in substantially the
form of Exhibit C hereto.
CUSTODIAN: A custodian appointed pursuant to a Custodial Agreement and
reasonably acceptable to the Insurer. Norwest Bank Minnesota, National
Association is acceptable to the Insurer.
CUT-OFF DATE: February 1, 2000.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due in or prior to the month of the Cut-off Date,
whether or not received.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation.
DEFICIENCY AMOUNT: With respect to the Class A-I Certificates or
Class A-II Certificates as of any Distribution Date, (i) any shortfall in
amounts available in the Certificate Account to pay interest for the related
Interest Accrual Period on the Certificate Principal Balance of such Class A
Certificates at the then-applicable Pass-Through Rate, net of any interest
shortfalls relating to the Relief Act and any Group I Prepayment Interest
Shortfalls, any Group II Prepayment Interest Shortfalls and any Class A-II Basis
Risk Shortfalls allocated to such Class A Certificates, (ii) the principal
portion of any Realized Losses allocated to such Class A Certificates with
respect to such Distribution Date and (iii) the Certificate Principal Balance of
such Class A Certificates to the extent unpaid on February 25, 2031 or earlier
termination of the Trust Fund pursuant to Section 9.01(a) hereof.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.
DEFINITIVE CERTIFICATE: Any definitive, fully registered Certificate.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
DELINQUENCY RATIO: With respect to any Distribution Date, the
percentage equivalent of a fraction (a) the numerator of which equals the sum of
(i) 100% of the aggregate Stated Principal Balance of all Mortgage Loans that
are 90 or more days Delinquent, 75% of the aggregate Stated Principal Balance of
all Mortgage Loans that are in foreclosure and (iii) 100% of the aggregate
Stated Principal Balance of all Mortgage Loans that are converted to REO
Properties, in each case as of the last day of the related Due Period and (b)
the denominator of which is the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of such Due Period.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such PAYMENT WAS DUE, OR, IF THERE IS
NO SUCH CORRESPONDING DAY (E.G., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
DEPOSITORY: The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository for purposes
of registering those Certificates that are to be Book-Entry Certificates is Cede
& Co. The Depository shall at all times be a "clearing corporation" as defined
in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York
and a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DESTROYED MORTGAGE NOTE: A Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
DETERMINATION DATE: With respect to any Distribution Date, the 20th
day (or if such 20th day is not a Business Day, the Business Day immediately
following such 20th day) of the month of the related Distribution Date.
DISQUALIFIED ORGANIZATION: Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code, which includes
any of the following: (i) the United States, any State or political subdivision
thereof, any possession of the United States, or any agency or instrumentality
of any of the foregoing (other than an instrumentality which is a corporation if
all of its activities are subject to tax and, except for the FHLMC, a majority
of its board of directors is not selected by such governmental unit), (ii) a
foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code. A Disqualified Organization also includes any "electing large partnership"
as defined in Section 775(a) of the Code and any other Person so designated by
the Trustee based upon an Opinion of Counsel that the holding of an Ownership
Interest in a Class R Certificate by such Person may cause the related REMIC or
any Person having an Ownership Interest in any Class of Certificates (other than
such Person) to incur a liability for any federal tax imposed under the Code
that would not otherwise be imposed but for the Transfer of an Ownership
Interest in a Class R Certificate to such Person. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code or successor provisions.
DISTRIBUTION DATE: The 25th day of any month beginning in the month
immediately following the month of the initial issuance of the Certificates or,
if such 25th day is not a Business Day, the Business Day immediately following
such 25th day.
DUE DATE: With respect to each Mortgage Loan, the date on which the monthly
payment is due.
DUE PERIOD: With respect to any Distribution Date, the calendar month in
which such Distribution Date occurs.
ELIGIBLE ACCOUNT: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available, or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel delivered to the
Trustee and each Rating Agency) the registered Holders of Certificates have a
claim with respect to the funds in such account or a perfected first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (iii) in the case of the Custodial Account, a trust account or
accounts maintained in the corporate trust department of Bank One, National
Association, or (iv) in the case of the Certificate Account, a trust account or
accounts maintained in the corporate trust division of Bank One, National
Association, or (v) an account or accounts of a depository institution
acceptable to each Rating Agency (as evidenced in writing by each Rating Agency
that use of any such account as the Custodial Account or the Certificate Account
will not reduce the rating assigned to any Class of Certificates by such Rating
Agency below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency).
EVENT OF DEFAULT: As defined in Section 7.01.
EXCESS BANKRUPTCY LOSS: With respect to the Mortgage Loans in a Loan
Group, any Bankruptcy Loss, or portion thereof, which exceeds the then
applicable Bankruptcy Amount with respect to the related Loan Group.
EXCESS FRAUD LOSS: With respect to the Mortgage Loans in a Loan
Group, any Fraud Loss, or portion thereof, which exceeds the then applicable
Fraud Loss Amount with respect to the related Loan Group.
EXCESS SPECIAL HAZARD LOSS: With respect to the Mortgage Loans in a
Loan Group, any Special Hazard Loss, or portion thereof, that exceeds the then
applicable Special Hazard Amount with respect to the related Loan Group.
EXTRAORDINARY EVENTS: Any of the following conditions with respect
to a Mortgaged Property or Mortgage Loan causing or resulting in a loss which
causes the liquidation of such Mortgage Loan:
(a) losses that are of the type that would be covered by the
fidelity bond and the errors and omissions insurance policy required to be
maintained pursuant to Section 3.12(b) but are in excess of the coverage
maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether such
loss be direct or indirect, proximate or remote or be in whole or in part
caused by, contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war, including
action in hindering, combatting or defending against an actual, impending
or expected attack;
1. by any government or sovereign power, de jure or de facto, or
by any authority maintaining or using military, naval or air forces;
or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(d) any weapon of war employing atomic fission or radioactive force
whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combatting or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any government
or public authority; or risks of contraband or illegal transportation or
trade.
EXTRAORDINARY LOSSES: Any loss incurred on a Mortgage Loan caused
by or resulting from an Extraordinary Event.
FASIT: A "financial asset securitization investment trust" within
the meaning of Section 860L of the Code.
FDIC: Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FINAL DISTRIBUTION DATE: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01, which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.
FITCH IBCA: Fitch IBCA, Inc. or its successor in interest.
FIXED RATE CERTIFICATES: The Class A-I Certificates.
FNMA: Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
FORECLOSURE PROFITS: As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and REO Proceeds (net of all amounts reimbursable
therefrom pursuant to Section 3.10(a)(ii)) in respect of each Mortgage Loan or
REO Property for which a Cash Liquidation or REO Disposition occurred in the
related Prepayment Period over the sum of the unpaid principal balance of such
Mortgage Loan or REO Property (determined, in the case of an REO Disposition, in
accordance with Section 3.14) plus accrued and unpaid interest at the Mortgage
Rate on such unpaid principal balance from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Cash Liquidation or REO Disposition occurred.
FRAUD LOSS AMOUNT: As of any date of determination after the Cut-off
Date and with respect to each of Loan Group I and Loan Group II, an amount equal
to (X) prior to the first anniversary of the Cut-off Date an amount equal to
3.00% of the aggregate outstanding principal balance of all of the Mortgage
Loans in the related Loan Group as of the Cut-off Date minus the aggregate
amount of Fraud Losses with respect to such Loan Group allocated to the Class SB
Certificates or the Loan Group I Excess Cash Flow or Loan Group II Excess Cash
Flow in accordance with Section 4.05 since the Cut-off Date up to such date of
determination, (Y) from the first to the second anniversary of the Cut-off Date,
an amount equal to (1) the lesser of (a) the Fraud Loss Amount as of the most
recent anniversary of the Cut-off Date and (b) 2.00% of the aggregate
outstanding principal balance of all of the Mortgage Loans in the related Loan
Group as of the most recent anniversary of the Cut-off Date minus (2) the Fraud
Losses with respect to such Loan Group allocated to the Class SB Certificates or
the Loan Group I Excess Cash Flow or Loan Group II Excess Cash Flow in
accordance with Section 4.05 since the most recent anniversary of the Cut-off
Date up to such date of determination and (Z) from the second to the fifth
anniversary of the Cut-off Date, an amount equal to (1) the lesser of (a) the
Fraud Loss Amount as of the most recent anniversary of the Cut-off Date and (b)
1.00% of the aggregate outstanding principal balance of all of the Mortgage
Loans in the related Loan Group as of the most recent anniversary of the Cut-off
Date minus (2) the Fraud Losses with respect to such Loan Group allocated to the
Class SB Certificates or the Loan Group I Excess Cash Flow or Loan Group II
Excess Cash Flow in accordance with Section 4.05 since the most recent
anniversary of the Cut-off Date up to such date of determination. On and after
the fifth anniversary of the Cut-off Date the Fraud Loss Amount with respect to
each Loan Group shall be zero.
The Fraud Loss Amount may be further reduced by the Master Servicer
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i) obtain written
approval from the Insurer and written confirmation from each Rating Agency that
such reduction shall not reduce the rating assigned to any Class of Certificates
by such Rating Agency below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such Rating Agency,
without taking into account the related Policy; and (ii) provide a copy of such
written confirmation to the Trustee and the Insurer.
FRAUD LOSSES: Losses on Mortgage Loans as to which there was fraud in the
origination of such Mortgage Loan.
GROSS MARGIN: As to each Adjustable Group II Loan, the fixed
percentage set forth in the related Mortgage Note and indicated in Exhibit D-2
hereto as the "NOTE MARGIN," which percentage is added to the Index on each
Adjustment Date to determine (subject to rounding in accordance with the related
Mortgage Note, the Periodic Cap, the Maximum Mortgage Rate and the Minimum
Mortgage Rate) the interest rate to be borne by such Mortgage Loan until the
next Adjustment Date.
GROUP I AVAILABLE EXCESS CASH FLOW: For any Distribution Date, the
excess, if any, of the Loan Group I Excess Cash Flow over the sum of the amounts
payable therefrom PURSUANT TO CLAUSES FIRST THROUGH TENTH of Section 4.02(d)(i).
GROUP I CUMULATIVE INSURANCE PAYMENT: As of any time of
determination, the aggregate amount of all Insured Amounts previously paid by
the Insurer under the Group I Policy in respect of the Class A-I Certificates
minus (a) the sum of (i) the aggregate of all payments previously made to the
Insurer pursuant to Section 4.02 hereof as reimbursement for such Insured
Amounts, (ii) any payments made by the Insurer and related to Loan Group I
attributable to Excess Bankruptcy Losses, Excess Fraud Losses, Excess Special
Hazard Losses and Extraordinary Losses and (iii) any payments made by the
Insurer attributable to Realized Losses in excess of 8.70% of the aggregate
Cut-off Date Principal Balance of the Mortgage Loans, plus (b) interest thereon
from the date such amounts became due until paid in full, at a rate of interest
equal to the Late Payment Rate.
GROUP I LOANS: The Mortgage Loans designated on the Mortgage Loan Schedule
attached hereto as Exhibit D-1.
GROUP I POLICY: The Certificate Guaranty Insurance Policy No. AB0339BE
issued by the Insurer in respect of the Class A-I Certificates, a copy of which
is attached hereto as Exhibit O-1.
GROUP I REO PROPERTIES: The REO Properties related to the Group I
Loans.
GROUP I PREPAYMENT INTEREST SHORTFALL: With respect to any
Distribution Date, the amount of any Prepayment Interest Shortfalls with respect
to Loan Group I for such Distribution Date, to the extent not offset by the
Master Servicer with a payment of Compensating Interest as provided in Section
3.16 or by Loan Group I Excess Cash Flow or Loan Group II Excess Cash Flow as
provided in Section 4.02(d), to be allocated among the Class A-I Certificates in
proportion to their respective amounts of Accrued Certificate Interest for such
Distribution Date.
GROUP II AVAILABLE EXCESS CASH FLOW: For any Distribution Date, the
excess, if any, of the Loan Group II Excess Cash Flow over the sum of the
amounts payable therefrom PURSUANT TO CLAUSES FIRST THROUGH TENTH of Section
4.02(d)(ii).
GROUP II CUMULATIVE INSURANCE PAYMENT: As of any time of
determination, the aggregate amount of all Insured Amounts previously paid by
the Insurer under the Group II Policy in respect of the Class A-II Certificates
minus (a) the sum of (i) the aggregate of all payments previously made to the
Insurer pursuant to Section 4.02 hereof as reimbursement for such Insured
Amounts, (ii) any payments made by the Insurer and related to Loan Group II
attributable to Excess Bankruptcy Losses, Excess Fraud Losses, Excess Special
Hazard Losses and Extraordinary Losses and (iii) any payments made by the
Insurer attributable to Realized Losses in excess of 8.70% of the aggregate
Cut-off Date Principal Balance of the Mortgage Loans, plus (b) interest thereon
from the date such amounts became due until paid in full, at a rate of interest
equal to the Late Payment Rate.
GROUP II LOANS: The Mortgage Loans designated on the Mortgage Loan
Schedule attached hereto as Exhibit D-2-A and Exhibit D-2-B.
GROUP II POLICY: The Certificate Guaranty Insurance Policy No. AB0341BE
issued by the Insurer in respect of the Class A-II Certificates, a copy of which
is attached
hereto as Exhibit O-2.
GROUP II PREPAYMENT INTEREST SHORTFALL: With respect to any
Distribution Date, the amount of any Prepayment Interest Shortfalls with respect
to Loan Group II for such Distribution Date, to the extent not offset by the
Master Servicer with a payment of Compensating Interest as provided in Section
3.16 or by Loan Group II Excess Cash Flow or Loan Group I Excess Cash Flow as
provided in Section 4.02(d), to be allocated to the Class A-II Certificates for
such Distribution Date.
GROUP II REO PROPERTIES: The REO Properties related to the Group II
Loans.
HIGH COST LOAN: The Mortgage Loans set forth hereto as Exhibit M
that are subject to special rules, disclosure requirements and other provisions
that were added to the Federal Truth in Lending Act by the Home Ownership and
Equity Protection Act of 1994.
INDEPENDENT: When used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Depositor, the Master
Servicer and the Trustee, or any Affiliate thereof, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Depositor, the Master Servicer or the Trustee or in an Affiliate thereof, and
(iii) is not connected with the Depositor, the Master Servicer or the Trustee as
an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
INDEX: With respect to any Group II Loan and as to any Adjustment
Date therefor, (i) a per annum rate equal to the weekly average yield on U.S.
Treasury securities adjusted to a constant maturity of one year or three years
as reported by the Federal Reserve Board in statistical Release No. H.15(519) as
most recently available as of the date forty-five days prior to the Adjustment
Date (or 25 days with respect to 1 Group II Loan) or (ii) a per annum rate equal
to an average of interbank offered rates for six-month U.S. dollar-denominated
deposits in the London market based on quotations of MAJOR BANKS, AS PUBLISHED
IN THE WALL STREET JOURNAL and as most recently available (A) as most recently
available as of the date forty-five days prior to such Adjustment Date or (B) as
of the last business day of the month preceding the month in which the
Adjustment Date occurs as published by Fannie Mae and as most recently available
as of the date forty-five days prior to the Adjustment Date; each as provided in
the related Mortgage Note, or, in the event that such index is no longer
available, an index selected by the Master Servicer and reasonably acceptable to
the Trustee that is based on comparable information.
INITIAL CLASS A-II BASIS RISK RESERVE FUND DEPOSIT: $10,000.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to each Class of
Certificates, the Certificate Principal Balance of such Class of Certificates as
of the Cut-off Date as set forth in the Preliminary Statement hereto.
INSURANCE ACCOUNT: The account or accounts created and maintained
pursuant to Section 4.08, which shall be entitled "Bank One, National
Association, as trustee, in trust for the registered holders of Residential
Asset Securities Corporation, Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2000-KS1, Class A," and which must be an Eligible Account.
INSURANCE AGREEMENT: The Insurance and Indemnity Agreement, dated as of the
Closing Date, among the Insurer, the Trustee, the Master Servicer and the
Depositor.
INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Insurance Policy or any other related insurance policy
(excluding the Policies) covering a Mortgage Loan, to the extent such proceeds
are payable to the mortgagee under the Mortgage, any Subservicer, the Master
Servicer or the Trustee and are not applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account.
INSURED AMOUNT: With respect to the Class A Certificates, as of any
Distribution Date, the Deficiency Amount, if any, for such Distribution Date.
INSURER: Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance
corporation or its successors in interest.
INSURER ACCOUNT: An account of the Insurer maintained at Citibank, N.A.
(ABA No. 021-000089), Account No. 40609486, Attention: Pamela Dottin, or such
other account as may be designated by the Insurer to the Trustee in writing not
less than five Business Days prior to the related Distribution Date.
INSURER DEFAULT: The existence and continuance of any of the
following: (a) a failure by the Insurer to make a payment required under either
of the Policies in accordance with its terms; or (b)(i) the Insurer (A) files
any petition or commences any case or proceeding under any provision or chapter
of the Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes
a general assignment for the benefit of its creditors, or (C) has an order for
relief entered against it under the Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or (ii) a court of competent
jurisdiction, the Wisconsin insurance department or other competent regulatory
authority enters a final and nonappealable order, judgment or decree (A)
appointing a custodian, trustee, agent or receiver for the Insurer or for all or
any material portion of its property or (B) authorizing the taking of possession
by a custodian, trustee, agent or receiver of the Insurer (or the taking of
possession of all or any material portion of the property of the Insurer).
INTEREST ACCRUAL PERIOD: With respect to any Fixed Rate Certificate
and any Distribution Date, the calendar month preceding the month in which such
Distribution Date occurs. With respect to the Adjustable Rate Certificates,
Class SB-I Certificates and Class SB-II Certificates, the period commencing on
the Distribution Date of the month immediately preceding the month in which such
Distribution Date occurs (or, in the case of the first Distribution Date,
commencing on the Closing Date) and ending on the day preceding such
Distribution Date. Notwithstanding the foregoing, the distributions of interest
on any Distribution Date and the calculation of Accrued Certificate Interest for
all Classes of Certificates will reflect interest accrued, and receipts with
respect thereto, on the Mortgage Loans for the preceding calendar month, as may
be reduced in accordance with the definition of Accrued Certificate Interest.
JUNIOR MORTGAGE LOAN: Any Mortgage Loan that is secured by a junior lien on
the related Mortgaged Property.
LATE COLLECTIONS: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
LATE PAYMENT RATE: As defined in the Insurance Agreement.
LIBOR: With respect to any Distribution Date, the arithmetic mean of
the London interbank offered rate quotations for one-month U.S. Dollar deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in London, England are required or
authorized to by law to be closed.
LIBOR RATE ADJUSTMENT DATE: With respect to each Distribution Date
and the Adjustable Rate Certificates, the second LIBOR Business Day immediately
preceding the commencement of the related Interest Accrual Period.
LIQUIDATION PROCEEDS: Amounts (other than Insurance Proceeds)
received by the Master Servicer in connection with the taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
in connection with the liquidation of a defaulted Mortgage Loan through
trustee's sale, foreclosure sale or otherwise, other than REO Proceeds.
LOAN-TO-VALUE RATIO: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
LOAN GROUP: Either or both of Loan Group I or Loan Group II.
LOAN GROUP I: The group of Mortgage Loans comprised of the Group I Loans.
LOAN GROUP I EXCESS CASH FLOW: As of any Distribution Date, the
excess of (x) the Available Distribution Amount for Loan Group I for such
Distribution Date over (y) the sum of (1) the amount payable on such
Distribution Date in respect of the Class A-I Certificates pursuant to Section
4.02(c)(i) and (2) the sum of the amounts relating to the Group I Loans
described in clauses (b)(1)-(3) of the definition of Principal Distribution
Amount.
LOAN GROUP I OPTIONAL TERMINATION DATE: Any Distribution Date on or
after which the Loan Group I Stated Principal Balance (before giving effect to
distributions to be made on such Distribution Date) is less than 10% of the
aggregate Cut-off Date Principal Balance of the Group I Loans.
LOAN GROUP I STATED PRINCIPAL BALANCE: As of any date of
determination, the aggregate of the Stated Principal Balances of each Group I
Loan that was an Outstanding Mortgage Loan on the Due Date in the Due Period
preceding such date of determination.
LOAN GROUP II: The group of Mortgage Loans comprised of the Group II Loans.
LOAN GROUP II EXCESS CASH FLOW: As of any Distribution Date, the
excess of (x) the Available Distribution Amount for Loan Group II for such
Distribution Date over (y) the sum of (1) the amount payable on such
Distribution Date in respect of the Class A-II Certificates pursuant to Section
4.02(c)(i) and (2) the sum of the amounts relating to the Group II Loans
described in clauses (b)(1)-(3) of the definition of Principal Distribution
Amount.
LOAN GROUP II OPTIONAL TERMINATION DATE: Any Distribution Date on or
after which the Loan Group II Stated Principal Balance (before giving effect to
distributions to be made on such Distribution Date) is less than 10% of the
aggregate Cut-off Date Principal Balance of the Group II Loans.
LOAN GROUP II STATED PRINCIPAL BALANCE: As to any date of
determination, the aggregate of the Stated Principal Balances of each Group II
Loan that was an Outstanding Mortgage Loan on the Due Date in the Due Period
preceding such date of determination.
MATURITY DATE: The latest possible maturity date, solely for purposes of
Section 1.860G-1(a)(4)(iii) of the Treasury Regulations.
MAXIMUM GROUP I RATE: With respect to the Class A-I-5 Certificates,
Class A-I-6 Certificates and each Interest Accrual Period, a per annum rate
equal to the weighted average of the Net Mortgage Rates on the Group I Loans as
of the Due Date immediately preceding the related Due Period, weighted on the
basis of the respective Stated Principal Balances immediately preceding the
related Distribution Date.
MAXIMUM GROUP II RATE: With respect to the Class A-II Certificates
and each Interest Accrual Period, a per annum rate equal to the weighted average
of the Net Mortgage Rates on the Group II Loans as of the Due Date immediately
preceding the related Due Period, weighted on the basis of the respective Stated
Principal Balances immediately preceding the related Distribution Date.
MAXIMUM MORTGAGE RATE: As to any Adjustable Group II Loan, the rate
indicated in Exhibit D hereto as the "NOTE CEILING," which rate is the maximum
interest rate that may be applicable to such Group II Loan at any time during
the life of such Mortgage Loan. As to any other Group II Loan, the Mortgage Rate
thereon.
MAXIMUM NET MORTGAGE RATE: As to any Adjustable Group II Loan, the
rate per annum indicated in Exhibit D as the "MAX NET MTG RT" for such Group II
Loan. As to any other Group II Loan, the Net Mortgage Rate thereof.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) SYSTEM: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered with
MERS on the MERS(R) System.
MINIMUM MORTGAGE RATE: As to any Adjustable Group II Loan, the
greater of (i) the Note Margin and (ii) the rate indicated in Exhibit D hereto
as the "NOTE FLOOR", which rate may be applicable to such Group II Loan at any
time during the life of such Group II Loan. As to any other Group II Loan, the
Mortgage Rate thereon.
MODIFIED MORTGAGE LOAN: Any Mortgage Loan that has been the subject of a
Servicing Modification.
MODIFIED NET MORTGAGE RATE: As to any Mortgage Loan that is the
subject of a Servicing Modification, the Net Mortgage Rate minus the rate per
annum by which the Mortgage Rate on such Mortgage Loan was reduced.
MOM LOAN: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.
MONTHLY PAYMENT: With respect to any Mortgage Loan (including any
REO Property) and the Due Date in any Due Period, the payment of principal and
interest due thereon in accordance with the amortization schedule at the time
applicable thereto (after adjustment, if any, for Curtailments and for Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than a Deficient
Valuation, or similar proceeding or any moratorium or similar waiver or grace
period and before any Servicing Modification that constitutes a reduction of the
interest rate on such Mortgage Loan).
MOODY'S: Moody's Investors Service, Inc. or its successor in interest.
MORTGAGE: With respect to each Mortgage Note related to a Mortgage
Loan, the mortgage, deed of trust or other comparable instrument creating a
first or junior lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
MORTGAGE FILE: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
MORTGAGE LOAN SCHEDULE: The list of the Mortgage Loans attached
hereto as Exhibit D-1 (with respect to the Group I Loans) and Exhibit D-2 (with
respect to Group II Loans) (each as amended from time to time to reflect the
addition of Qualified Substitute Mortgage Loans), which lists shall set forth at
a minimum the following information as to each Mortgage Loan in the related Loan
Group:
(i) the Mortgage Loan identifying number ("RFC LOAN #");
(ii) the street address of the Mortgaged Property including state
and zip code ("ADDRESS");
(iii) the maturity of the Mortgage Note ("MATURITY DATE" for the
Group I Loans and "MATURITY DT" for the Group II Loans);
(iv) the Mortgage Rate as of the Cut-off Date ("ORIG RATE" for the
Group I Loans and "CURR RATE" for the Group II Loans);
(v) the Subservicer pass-through-rate ("CURR NET");
(vi) the Net Mortgage Rate as of the Cut-off Date ("NET MTG RT");
(vii) the scheduled monthly payment of principal, if any, and
interest as of the Cut-off Date ("ORIGINAL P & I" for the Group I Loans and
"CURRENT P & I" for the Group II Loans);
(viii) the Cut-off Date Principal Balance ("PRINCIPAL BAL");
(ix) the Loan-to-Value Ratio or Combined Loan-to-Value Ratio at
origination ("LTV");
(x) the rate at which the Subservicing Fee accrues as of the Cut-off
Date ("SUBSERV FEE") and at which the Servicing Fee accrues ("MSTR SERV FEE");
(xi) a code "T", "BT" or "CT" under the column "LN FEATURE,"
indicating that the Mortgage Loan is secured by a second or vacation residence
(the absence of any such code means the Mortgage Loan is secured by a primary
residence);
(xii) a code "N" under the column "OCCP CODE", indicating that the
Mortgage Loan is secured by a non-owner occupied residence (the absence of any
such code means the Mortgage Loan is secured by an owner occupied residence);
(xiii) the Maximum Mortgage Rate for the Group II Loans ("NOTE
CEILING"); (xiv) the Maximum Net Mortgage Rate for the Group II
Loans ("NET
CEILING");
(xv) the Note Margin for the Adjustable Group II Loans ("NOTE MARGIN");
(xvi) the first Adjustment Date after the Cut-off Date for the
Adjustable Group II Loans ("NXT INT CHG DT");
(xvii) the Periodic Cap for the Adjustable Group II Loans ("PERIODIC
DECR" or "PERIODIC INCR");
(xviii) the rounding of the semi-annual or annual adjustment to the
Mortgage Rate with respect to the Adjustable Group II Loans ("NOTE METHOD"); and
(xix) a code indicating whether such Mortgage Loan is a Convertible
Mortgage Loan;
Such schedules may consist of multiple reports that collectively set
forth all of the information required.
MORTGAGE LOANS: Such of the mortgage loans transferred and assigned
to the Trustee pursuant to Section 2.01 as from time to time are held or deemed
to be held as a part of the Trust Fund, the Mortgage Loans originally so held
being identified in the initial Mortgage Loan Schedule, and Qualified Substitute
Mortgage Loans held or deemed held as part of the Trust Fund including, without
limitation, with respect to each Mortgage Loan, each related Mortgage Note,
Mortgage and Mortgage File and all rights appertaining thereto.
MORTGAGE NOTE: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
MORTGAGE RATE: As to any Mortgage Loan, the interest rate borne by
the related Mortgage Note, or any modification thereto other than a Servicing
Modification. The Mortgage Rate on the Adjustable Group II Loans will adjust:
(a) semi-annually commencing (i) six months after the date of origination, (ii)
one year after the date of origination, (iii) two years after the date of
origination, or (iv) three years after the date of origination, (b) bi-annually
or (c) annually commencing (i) one year after the date of origination or (ii)
three years after the date of origination, each as specified in the related
Mortgage Note, in each case, on the Adjustment Date to equal the sum (rounded to
the nearest multiple of one-eighth of one percent (0.125%) or up to the nearest
one-eighth of one percent with respect to 9.9% of the Group II Loans, which are
indicated by a "U" on Exhibit D-2 hereto, or with respect to 0.1% of the Group
II Loans, which are indicated by an "X" on Exhibit D-2 hereto under the heading
"NOTE METHOD"), of the related Index plus the Note Margin, in each case subject
to the applicable Periodic Cap, Maximum Mortgage Rate and Minimum Mortgage Rate.
MORTGAGED PROPERTY: The underlying real property securing a Mortgage Loan.
MORTGAGOR: The obligor on a Mortgage Note.
NET MORTGAGE RATE: As to any Group I Loan, a per annum rate equal to
the Adjusted Mortgage Rate for such Mortgage Loan minus the sum of the Servicing
Fee Rate and the Certificate Insurer Premium Rate. With respect to each
Adjustable Group II Loan and each Due Date occurring on or prior to the first
Adjustment Date for such Group II Loan, the rate designated as the "NET MTG RT"
for such Group II Loan on Exhibit D-2 hereto and with respect to each Adjustable
Group II Loan and each Due Date occurring after each Adjustment Date, a rate
equal to the Adjusted Mortgage Rate minus the sum of the Servicing Fee Rate and
the Certificate Insurer Premium Rate; provided that (i) the Net Mortgage Rate
becoming effective on any Adjustment Date shall not be greater or less than the
Net Mortgage Rate immediately prior to such Adjustment Date plus or minus the
Periodic Cap applicable to such Group II Loan and (ii) the Net Mortgage Rate for
any Group II Loan shall not exceed a rate equal to the Maximum Net Mortgage Rate
for such Group II Loan.
NON-PRIMARY RESIDENCE LOANS: The Mortgage Loans designated as secured by
second or vacation residences, or by non-owner occupied residences, on the
Mortgage Loan Schedule.
NON-UNITED STATES PERSON: Any Person other than a United States Person.
NONRECOVERABLE ADVANCE: Any Advance previously made or proposed to
be made by the Master Servicer in respect of a Mortgage Loan (other than a
Deleted Mortgage Loan) which, in the good faith judgment of the Master Servicer,
will not, or, in the case of a proposed Advance, would not, be ultimately
recoverable by the Master Servicer from related Late Collections, Insurance
Proceeds, Liquidation Proceeds or REO Proceeds.
NONSUBSERVICED MORTGAGE LOAN: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.
NOTE MARGIN: As to each Adjustable Group II Loan, the fixed
percentage set forth in the related Mortgage Note and indicated in Exhibit D-2
hereto as the "NOTE MARGIN," which percentage is added to the Index on each
Adjustment Date to determine (subject to rounding in accordance with the related
Mortgage Note, the Periodic Cap, the Maximum Mortgage Rate and the Minimum
Mortgage Rate) the interest rate to be borne by such Group II Loan until the
next Adjustment Date.
NOTICE: As defined in Section 4.04.
OFFICERS' CERTIFICATE: A certificate signed by the Chairman of the
Board, the President or a Vice President or Assistant Vice President, or a
Director or Managing Director, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries of the Depositor or the Master
Servicer, as the case may be, and delivered to the Trustee and the Insurer, as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel acceptable to the
Trustee and the Master Servicer, and reasonably acceptable to the Insurer, who
may be counsel for the Depositor or the Master Servicer, provided that any
opinion of counsel (i) referred to in the definition of "Disqualified
Organization" or (ii) relating to the qualification of the Trust Fund as a REMIC
or compliance with the REMIC Provisions must, unless otherwise specified, be an
opinion of Independent counsel.
OUTSTANDING MORTGAGE LOAN: As to the Due Date in any Due Period, a
Mortgage Loan (including an REO Property) that was not the subject of a
Principal Prepayment in Full, Cash Liquidation or REO Disposition and that was
not purchased, deleted or substituted for prior to such Due Date pursuant to
Section 2.02, 2.03, 2.04, 3.21 or 4.07.
OWNERSHIP INTEREST: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
PASS-THROUGH RATE: With respect to the Fixed Rate Certificates and
any Distribution Date, the per annum rate set forth in the Preliminary Statement
hereto. With respect to the Class A-I-5 Certificates and the Class A-I-6
Certificates and each Interest Accrual Period, a per annum rate equal to the
lesser of (i) the fixed pass-through rate and (ii) the Maximum Group I Rate.
With respect to the Adjustable Rate Certificates and each Interest Accrual
Period, a per annum rate equal to the lesser of (i) LIBOR plus the Applicable
Spread, and (ii) the Maximum Group II Rate.
With respect to the Class SB-I Certificates and any Distribution
Date, a rate per annum equal to the interest distributable thereon as provided
in Section 1.03 divided by the Certificate Principal Balance thereof, converted
to a per annum rate.
With respect to the Class SB-II Certificates and any Distribution
Date, a rate per annum equal to the interest distributable thereon as provided
in Section 1.03 divided by the Certificate Principal Balance thereof, converted
to a per annum rate.
PAYING AGENT: Bank One, National Association or any successor Paying Agent
appointed by the Trustee.
PERCENTAGE INTEREST: With respect to any Class A Certificate, the
undivided percentage ownership interest in the related Class evidenced by such
Certificate, which percentage ownership interest shall be equal to the Initial
Certificate Principal Balance thereof divided by the aggregate Initial
Certificate Principal Balance of all of the Certificates of the same Class. The
Percentage Interest with respect to a Class SB or Class R Certificate shall be
stated on the face thereof.
PERIODIC CAP: With respect to each Adjustable Group II Loan, the
periodic rate cap that limits the increase or the decrease of the related
Mortgage Rate on any Adjustment Date pursuant to the terms of the related
Mortgage Note.
PERMITTED INVESTMENTS: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by the
United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition thereof,
provided that the unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by each Rating Agency in
its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than 365
days or a remaining maturity of more than 30 days) denominated in United
States dollars of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof or
of any domestic branch of a foreign depository institution or trust
company; provided that the debt obligations of such depository institution
or trust company (or, if the only Rating Agency is Standard & Poor's, in
the case of the principal depository institution in a depository
institution holding company, debt obligations of the depository
institution holding company) at the date of acquisition thereof have been
rated by each Rating Agency in its highest short-term rating available;
and provided further that, if the only Rating Agency is Standard & Poor's
and if the depository or trust company is a principal subsidiary of a bank
holding company and the debt obligations of such subsidiary are not
separately rated, the applicable rating shall be that of the bank holding
company; and, provided further that, if the original maturity of such
short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short-term rating
of such institution shall be A-1+ in the case of Standard & Poor's if
Standard & Poor's is the Rating Agency;
(iv) commercial paper and demand notes (having original maturities
of not more than 365 days) of any corporation incorporated under the laws
of the United States or any state thereof which on the date of acquisition
has been rated by each Rating Agency in its highest short-term rating
available; provided that such commercial paper or demand notes shall have
a remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated by each
Rating Agency in its highest rating available; and
(vi) other obligations or securities that are acceptable to the
Insurer and each Rating Agency as a Permitted Investment hereunder and
will not reduce the rating assigned to any Class of Certificates by such
Rating Agency below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such Rating
Agency, as evidenced in writing;
PROVIDED, HOWEVER, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the highest rating available on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Fitch IBCA
and Aaa in the case of Moody's, and references herein to the highest rating
available on unsecured commercial paper and short-term debt obligations shall
mean the following: A-1 in the case of Standard & Poor's, P-1 in the case of
Moody's and either A-1 by Standard & Poor's, P-1 by Moody's or F-1 by Fitch IBCA
in the case of Fitch IBCA.
PERMITTED TRANSFEREE: Any Transferee of a Class R Certificate, other than a
Disqualified Organization or Non-United States Person.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
POLICY OR POLICIES: Either or both of the Group I Policy or Group II
Policy.
PREPAYMENT ASSUMPTION: With respect to the Class A-I Certificates,
the prepayment assumption to be used for determining the accrual of original
issue discount and premium and market discount on such Certificates for federal
income tax purposes, which assumes a constant prepayment rate of one-tenth of
25% per annum of the then outstanding principal balance of the Group I Loans in
the first month of the life of such Group I Loans and an additional one-tenth of
25% per annum in each month thereafter until the tenth month, and beginning in
the tenth month and in each month thereafter during the life of the Group I
Loans, a constant prepayment rate of 25% per annum each month ("25% HEP"). With
respect to the Class A-II Certificates, a prepayment assumption of 28% of the
constant prepayment rate, used for determining the accrual of original issue
discount and premium and market discount on the Class A-II Certificates for
federal income tax purposes. The constant prepayment rate assumes that the
stated percentage of the outstanding principal balance of the Group II Loans is
prepaid over the course of a year.
PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the related Prepayment
Period, an amount equal to the excess of one month's interest at the related Net
Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified Mortgage
Loan) on the Stated Principal Balance of such Mortgage Loan over the amount of
interest (adjusted to the related Net Mortgage Rate (or Modified Net Mortgage
Rate in the case of a Modified Mortgage Loan)) paid by the Mortgagor for such
Prepayment Period to the date of such Principal Prepayment in Full or (b) a
Curtailment during the prior calendar month, an amount equal to one month's
interest at the related Net Mortgage Rate (or Modified Net Mortgage Rate in the
case of a Modified Mortgage Loan) on the amount of such Curtailment.
PREPAYMENT PERIOD: As to any Distribution Date, the calendar month
preceding the month of distribution.
PRIMARY INSURANCE POLICY: Each primary policy of mortgage guaranty
insurance as indicated on Exhibit D with the exception of either code "23" or
"96" under the column "MI CO CODE."
PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution Date and
each Loan Group, will be the lesser of:
(a) the excess of (i) the related Available Distribution Amount over
(ii) the related Interest Distribution Amount; and
(b) the sum of:
(1) the principal portion of each Monthly Payment received or
Advanced with respect to the related Due Period on each Outstanding
Mortgage Loan in such Loan Group;
(2) the Stated Principal Balance of any Mortgage Loan in such Loan
Group repurchased during the related Prepayment Period (or deemed to
have been so repurchased in accordance with Section 3.07(b))
pursuant to Section 2.02, 2.03, 2.04, 2.06, 3.21 or 4.07 and the
amount of any shortfall deposited in the Custodial Account in
connection with the substitution of a Deleted Mortgage Loan in such
Loan Group pursuant to Section 2.03 or 2.04 during the related
Prepayment Period;
(3) the principal portion of all other unscheduled collections
including, without limitation, Principal Prepayments in Full,
Curtailments, Insurance Proceeds, Liquidation Proceeds and REO
Proceeds) received during the related Prepayment Period (or deemed
to have been so received) to the extent applied by the Master
Servicer as recoveries of principal of the Mortgage Loans in such
Loan Group pursuant to Section 3.14;
(4) the principal portion of any Realized Losses incurred (or deemed
to have been incurred) on any Mortgage Loans in such Loan Group in
the related Prepayment Period to the extent covered by (i) Loan
Group I Excess Cash Flow for such Distribution Date and, to the
extent remaining after application in accordance with Section 4.05,
Loan Group II Excess Cash Flow (in the case of Realized Losses on
the Group I Loans); and (ii) Loan Group II Excess Cash Flow for such
Distribution Date and, to the extent remaining after application in
accordance with Section 4.05, Loan Group I Excess Cash Flow (in the
case of Realized Losses on the Group II Loans); and
(5) the amount of any related Subordination Increase Amount for such
Distribution Date; minus
(6) the amount of any related Subordination Reduction Amount for
such Distribution Date.
PRINCIPAL PREPAYMENT: Any payment of principal or other recovery on
a Mortgage Loan, including a recovery that takes the form of Liquidation
Proceeds or Insurance Proceeds, which is received in advance of its scheduled
Due Date and is not accompanied by an amount as to interest representing
scheduled interest on such payment due on any date or dates in any month or
months subsequent to the month of prepayment.
PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by a Mortgagor
of the entire principal balance of a Mortgage Loan.
PROGRAM GUIDE: The AlterNet Seller Guide or the Residential Funding
Seller Guide, as applicable, for mortgage collateral sellers that participate in
Residential Funding's AlterNet Mortgage Program, and Residential Funding's
Servicing Guide and any other subservicing arrangements which Residential
Funding has arranged to accommodate the servicing of the Mortgage Loans and in
each case all supplements and amendments thereto published by Residential
Funding from time to time.
PURCHASE PRICE: With respect to any Mortgage Loan (or REO Property)
required to be or otherwise purchased on any date pursuant to Section 2.02,
2.03, 2.04, 2.06, 3.21 or 4.07, an amount equal to the sum of (i) 100% of the
Stated Principal Balance thereof plus the principal portion of any related
unreimbursed Advances and (ii) unpaid accrued interest at the Adjusted Mortgage
Rate (or Modified Net Mortgage Rate plus the rate per annum at which the
Servicing Fee and the Certificate Insurer Premium Rate is calculated in the case
of a Modified Mortgage Loan) (or at the Net Mortgage Rate (or Modified Net
Mortgage Rate in the case of a Modified Mortgage Loan) plus the Certificate
Insurer Premium Rate in the case of a purchase made by the Master Servicer) on
the Stated Principal Balance thereof to the first day of the month following the
month of purchase from the Due Date to which interest was last paid by the
Mortgagor.
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan substituted by
Residential Funding or the Depositor for a Deleted Mortgage Loan which must, on
the date of such substitution, as confirmed in an Officers' Certificate
delivered to the Trustee, (i) have an outstanding principal balance, after
deduction of the principal portion of the monthly payment due in the month of
substitution (or in the case of a substitution of more than one Mortgage Loan
for a Deleted Mortgage Loan, an aggregate outstanding principal balance, after
such deduction), not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by Residential
Funding, in the Custodial Account in the month of substitution); (ii) have a
Mortgage Rate and a Net Mortgage Rate no lower than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively, of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value
Ratio at the time of substitution no higher than that of the Deleted Mortgage
Loan at the time of substitution; (iv) have a remaining term to stated maturity
not greater than (and not more than one year less than) that of the Deleted
Mortgage Loan; (v) comply with each representation and warranty set forth in
Sections 2.03 and 2.04 hereof and Section 4 of the Assignment Agreement and (vi)
in the case of the Adjustable Group II Loans, (w) have a Mortgage Rate that
adjusts with the same frequency and based upon the same Index as that of the
Deleted Mortgage Loan, (x) have a Note Margin not less than that of the Deleted
Mortgage Loan; (y) have a Periodic Rate Cap that is equal to that of the Deleted
Mortgage Loan; and (z) have a next Adjustment Date no later than that of the
Deleted Mortgage Loan.
RATING AGENCY: With respect to the Class A Certificates, Standard &
Poor's and Fitch IBCA. If either agency or a successor is no longer in
existence, "Rating Agency" shall be such statistical credit rating agency, or
other comparable Person, designated by the Depositor and the Insurer, notice of
which designation shall be given to the Trustee and the Master Servicer.
REALIZED LOSS: With respect to each Mortgage Loan (or REO Property)
as to which a Cash Liquidation or REO Disposition has occurred, an amount (not
less than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan
(or REO Property) as of the date of Cash Liquidation or REO Disposition, plus
(ii) interest (and REO Imputed Interest, if any) at the sum of the Net Mortgage
Rate and the Certificate Insurer Premium Rate from the Due Date as to which
interest was last paid or advanced to Certificateholders up to the last day of
the month in which the Cash Liquidation (or REO Disposition) occurred on the
Stated Principal Balance of such Mortgage Loan (or REO Property) outstanding
during each Due Period that such interest was not paid or advanced, minus (iii)
the proceeds, if any, received during the month in which such Cash Liquidation
(or REO Disposition) occurred, to the extent applied as recoveries of interest
at the sum of the Net Mortgage Rate and the Certificate Insurer Premium Rate and
to principal of the Mortgage Loan, net of the portion thereof reimbursable to
the Master Servicer or any Subservicer with respect to related Advances or
expenses as to which the Master Servicer or Subservicer is entitled to
reimbursement thereunder but which have not been previously reimbursed. With
respect to each Mortgage Loan which is the subject of a Servicing Modification,
(a) the amount by which the interest portion of a Monthly Payment or the
principal balance of such Mortgage Loan was reduced, and (b) any such amount
with respect to a Monthly Payment that was or would have been due in the month
immediately following the month in which a Principal Prepayment or the Purchase
Price of such Mortgage Loan is received or is deemed to have been received. With
respect to each Mortgage Loan which has become the subject of a Deficient
Valuation, the difference between the principal balance of the Mortgage Loan
outstanding immediately prior to such Deficient Valuation and the principal
balance of the Mortgage Loan as reduced by the Deficient Valuation. With respect
to each Mortgage Loan which has become the object of a Debt Service Reduction,
the amount of such Debt Service Reduction. Notwithstanding the above, neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Realized Loss
hereunder so long as the Master Servicer has notified the Trustee and the
Insurer in writing that the Master Servicer is diligently pursuing any remedies
that may exist in connection with the representations and warranties made
regarding the related Mortgage Loan and either (A) the related Mortgage Loan is
not in default with regard to payments due thereunder or (B) delinquent payments
of principal and interest under the related Mortgage Loan and any premiums on
any applicable primary hazard insurance policy and any related escrow payments
in respect of such Mortgage Loan are being advanced on a current basis by the
Master Servicer or a Subservicer, in either case without giving effect to any
Debt Service Reduction.
RECORD DATE: With respect to each Distribution Date, the close of
business on the last Business Day of the month next preceding the month in which
the related Distribution Date occurs.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code. As used herein, the term "the REMICs" shall
mean the REMICs created under this Agreement.
REMIC ADMINISTRATOR: Residential Funding Corporation. If Residential
Funding Corporation is found by a court of competent jurisdiction to no longer
be able to fulfill its obligations as REMIC Administrator under this Agreement
the Master Servicer or Trustee acting as Master Servicer shall appoint a
successor REMIC Administrator, acceptable to the Insurer, subject to assumption
of the REMIC Administrator obligations under this Agreement.
REMIC I: That segregated pool of assets subject hereto, constituting
a part of the primary trust created hereby and to be administered hereunder,
with respect to which a separate REMIC election is to be made, consisting of:
(i) the Group I Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the Group I Mortgage
Loans due after the Cut-off Date as shall be on deposit in the
Custodial Account or in the Certificate Account and identified as
belonging to the Trust Fund,
(iii) property which secured a Group I Loan and which has been acquired
for the benefit of the Certificateholders by foreclosure or deed in
lieu of foreclosure,
(iv) the hazard insurance policies and Primary Insurance Policies
pertaining to Group I Loans, if any, and
(v) all proceeds of clauses (i) through (iv) above.
REMIC I INTEREST: The REMIC I Regular Interests and the Class R-I
Certificates.
REMIC I REGULAR INTEREST: As defined in Section 1.03.
REMIC II INTEREST: The REMIC II Regular Interests and the Class R-II
Certificates.
REMIC II REGULAR INTEREST: As defined in Section 1.03.
REMIC I REMITTANCE RATE: The per annum rate at which interest
accrues on each REMIC I Regular Interest as set forth in Section 1.03.
REMIC II: That segregated pool of assets subject hereto,
constituting a part of the primary trust created hereby and to be administered
hereunder, with respect to which a separate REMIC election is to be made,
consisting of:
(i) the Group II Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the Group II Loans due
after the Cut-off Date as shall be on deposit in the Custodial
Account or in the Certificate Account and identified as belonging to
the Trust Fund,
(iii) property which secured a Group II Loan and which has been acquired
for the benefit of the Certificateholders by foreclosure or deed in
lieu of foreclosure,
(iv) the hazard insurance policies and Primary Insurance Policies
pertaining to Group II Loans, if any, and
(v) all proceeds of clauses (i) through (iv) above.
REMIC II REMITTANCE RATE: The per annum rate at which interest
accrues on each REMIC II Regular Interest as set forth in Section 1.03.
REMIC III: The segregated pool of assets consisting of all of the
REMIC I Regular Interests and REMIC II Regular Interests, with respect to which
a separate REMIC election is to be made.
REMIC III CERTIFICATE: Any Certificate, other than a Class R-I Certificate
or Class R-II Certificate.
REMIC III REGULAR CERTIFICATE: Any REMIC III Certificate, other than
a Class R-III Certificate.
REMIC III REGULAR INTEREST: Any of the nine certificated beneficial
ownership interests in REMIC III issued hereunder and, hereby, designated as a
"regular interest" in REMIC III, as follows: Class A-I-1 Certificates, Class
A-I-2 Certificates, Class A-I-3 Certificates, Class A-I-4 Certificates, Class
A-I-5 Certificates, Class A-I-6 Certificates, Class A-II Certificates, Class
SB-I Certificates and Class SB-II Certificates.
REMIC PROVISIONS: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary and final regulations (or, to the extent not inconsistent with
such temporary or final regulations, proposed regulations) and published
rulings, notices and announcements promulgated thereunder, as the foregoing may
be in effect from time to time.
REO ACQUISITION: The acquisition by the Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.14.
REO DISPOSITION: As to any REO Property, a determination by the
Master Servicer that it has received substantially all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
REO IMPUTED INTEREST: As to any REO Property, for any period, an
amount equivalent to interest (at the sum of the Net Mortgage Rate and the
Certificate Insurer Premium Rate that would have been applicable to the related
Mortgage Loan had it been outstanding) on the unpaid principal balance of the
Mortgage Loan as of the date of acquisition thereof for such period.
REO PROCEEDS: Proceeds, net of expenses, received in respect of any
REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into the
Custodial Account only upon the related REO Disposition.
REO PROPERTY: A Mortgaged Property acquired by the Master Servicer
through foreclosure or deed in lieu of foreclosure in connection with a
defaulted Mortgage Loan.
REQUEST FOR RELEASE: A request for release, the forms of which are
attached as Exhibit E hereto, or an electronic request in a form acceptable to
the Custodian.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement, the Program Guide or the related Subservicing Agreement in respect of
such Mortgage Loan.
RESIDENTIAL FUNDING: Residential Funding Corporation, a Delaware
corporation, in its capacity as seller of the Mortgage Loans to the Depositor
and any successor thereto.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any
officer of the Corporate Trust Department of the Trustee, including any Senior
Vice President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers to whom, with respect to a particular matter,
such matter is referred.
ROLLING SIX MONTH DELINQUENCY RATE: As of any Distribution Date, the
fraction, expressed as a percentage, equal to the average of the Delinquency
Ratio for each of the six (or one, two, three, four and five in the case of the
first, second, third, fourth and fifth Distribution Dates) immediately preceding
Due Periods.
SELLER: As to any Mortgage Loan, a Person, including any Subservicer, that
executed a Seller's Agreement applicable to such Mortgage Loan.
SELLER'S AGREEMENT: An agreement for the origination and sale of
Mortgage Loans generally in the form of the seller contract referred to or
contained in the Program Guide, or in such other form as has been approved by
the Master Servicer and the Depositor, each containing representations and
warranties in respect of one or more Mortgage Loans.
SERVICING ACCOUNTS: The account or accounts created and maintained pursuant
to Section 3.08.
SERVICING ADVANCES: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other unanticipated event by the Master Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, and any expenses
incurred in relation to any such proceedings that result from the Mortgage Loan
being registered on the MERS System, (iii) the management and liquidation of any
REO Property and (iv) compliance with the obligations under Sections 3.01, 3.08,
3.12(a) and 3.14, including, if the Master Servicer or any Affiliate of the
Master Servicer provides services such as appraisals and brokerage services that
are customarily provided by Persons other than servicers of mortgage loans,
reasonable compensation for such services.
SERVICING FEE: With respect to any Mortgage Loan and Distribution
Date, the fee payable monthly to the Master Servicer in respect of master
servicing compensation that accrues at an annual rate equal to the Servicing Fee
Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the
related Due Date in the related Due Period, as may be adjusted pursuant to
Section 3.16(e).
SERVICING FEE RATE: The per annum rate designated on the Mortgage Loan
Schedule as the "MSTR SERV FEE".
SERVICING OFFICER: Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee and the Insurer by the Master Servicer, as such list may from time
to time be amended.
SERVICING MODIFICATION: Any reduction of the interest rate on or the
outstanding principal balance of a Mortgage Loan that is in default or, in the
judgment of the Master Servicer, default is reasonably foreseeable pursuant to a
modification of such Mortgage Loan in accordance with Section 3.07(a).
SPECIAL HAZARD AMOUNT: As of any Distribution Date and with respect
to Loan Group I and Loan Group II, an amount equal to $6,500,003 and $7,500,033,
respectively, minus the sum of (i) the aggregate amount of Special Hazard Losses
allocated to the Class SB Certificates or the related Loan Group I Excess Cash
Flow or Loan Group II Excess Cash Flow in accordance with Section 4.05 and (ii)
the Adjustment Amount (as defined below) as most recently calculated. For each
anniversary of the Cut-off Date, the "Adjustment Amount" shall be equal to the
amount, if any, by which the amount calculated in accordance with the preceding
sentence (without giving effect to the deduction of the Adjustment Amount for
such anniversary) exceeds the greater of (A) the greatest of (i) twice the
outstanding principal balance of the Mortgage Loan in the related Loan Group
that has the largest outstanding principal balance on the Distribution Date
immediately preceding such anniversary, (ii) the product of 1.0% multiplied by
the outstanding principal balance of all Mortgage Loans in the related Loan
Group on the Distribution Date immediately preceding such anniversary and (iii)
the aggregate outstanding principal balance (as of the immediately preceding
Distribution Date) of the Mortgage Loans in the related Loan Group in any single
five-digit California zip code area with the largest amount of Mortgage Loans by
aggregate principal balance as of such anniversary and (B) the greater of (i)
the product of 0.5% multiplied by the outstanding principal balance of all
Mortgage Loans in the related Loan Group on the Distribution Date immediately
preceding such anniversary multiplied by a fraction, the numerator of which is
equal to the aggregate outstanding principal balance (as of the immediately
preceding Distribution Date) of all of the Mortgage Loans in such Loan Group
secured by Mortgaged Properties located in the State of California divided by
the aggregate outstanding principal balance (as of the immediately preceding
Distribution Date) of all of the Mortgage Loans in the related Loan Group,
expressed as a percentage, and the denominator of which is equal to 8.5% in the
case of Loan Group I and 10.0% with respect to Loan Group II (which percentage
is equal to the percentage of Mortgage Loans in such Loan Group initially
secured by Mortgaged Properties located in the State of California) and (ii) the
aggregate outstanding principal balance (as of the immediately preceding
Distribution Date) of the largest Mortgage Loan in the related Loan Group
secured by a Mortgaged Property (or, with respect to a Cooperative Loan, the
related Cooperative Apartment) located in the State of California.
The Special Hazard Amount may be further reduced by the Master
Servicer (including accelerating the manner in which coverage is reduced)
provided that prior to any such reduction, the Master Servicer shall (i) obtain
written approval of the Insurer and written confirmation from each Rating Agency
that such reduction shall not reduce the rating assigned to any Class of
Certificates by such Rating Agency below the lower of the then-current rating or
the rating assigned to such Certificates as of the Closing Date by such Rating
Agency, without taking into account the related Policy, and (ii) provide a copy
of such written confirmation to the Trustee and the Insurer.
SPECIAL HAZARD LOSS: Any Realized Loss not in excess of the lesser
of the cost of repair or the cost of replacement of a Mortgaged Property
suffered by such Mortgaged Property on account of direct physical loss,
exclusive of (i) any loss of a type covered by a hazard policy or a flood
insurance policy required to be maintained in respect of such Mortgaged Property
pursuant to Section 3.12(a), except to the extent of the portion of such loss
not covered as a result of any coinsurance provision and (ii) any Extraordinary
Loss.
STANDARD & POOR'S: Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies Inc., or its successor in interest.
STARTUP DATE: The day designated as such pursuant to Article X hereof.
STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or
related REO Property, at any given time, (i) the Cut-off Date Principal Balance
of the Mortgage Loan, minus (ii) the sum of (a) the principal portion of the
Monthly Payments due with respect to such Mortgage Loan or REO Property during
each Due Period in which the most recent Distribution Date occurs which were
received or with respect to which an Advance was made, and (b) all Principal
Prepayments with respect to such Mortgage Loan or REO Property, and all
Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the extent applied
by the Master Servicer as recoveries of principal in accordance with Section
3.14 with respect to such Mortgage Loan or REO Property, in each case which were
distributed pursuant to Section 4.02 on any previous Distribution Date, and (c)
any Realized Loss allocated to Certificateholders with respect thereto for any
previous Distribution Date.
SUBORDINATED AMOUNT: As of any Distribution Date with respect to
each Loan Group, the excess, if any, of (a) the aggregate Stated Principal
Balances of the Mortgage Loans in such Loan Group immediately following such
Distribution Date over (b) the Certificate Principal Balance of the Class A-I or
Class A-II Certificates (as applicable) as of such Distribution Date (after
taking into account the payment of the amounts described in clauses (b) (1)-(4)
of the definition of Principal Distribution Amount on such Distribution Date).
SUBORDINATION DEFICIENCY AMOUNT: With respect to any Distribution
Date and each Loan Group, the excess, if any, of (a) the related Targeted
Subordinated Amount applicable to such Distribution Date over (b) the related
Subordinated Amount applicable to such Distribution Date prior to taking into
account the payment of any related Subordination Increase Amounts on such
Distribution Date.
SUBORDINATION INCREASE AMOUNT: With respect to any Distribution Date
and each Loan Group, the lesser of (a) the Subordination Deficiency Amount as of
such Distribution Date (after taking into account the payment of the related
Principal Distribution Amount on such Distribution Date (exclusive of the
payment of any related Subordination Increase Amount)) and (b)
(i) with respect to Loan Group I, the amount of Loan Group I Excess Cash
Flow on such Distribution Date as reduced by the sum of (1) any Realized
Losses included in clause (b)(4) of the definition of Principal
Distribution Amount with respect to such Distribution Date that is
attributable to Loan Group I, (2) any Realized Losses included in clause
(b)(4) of the Principal Distribution Amount with respect to such
Distribution Date that is attributable to Loan Group II, (3) Group I
Cumulative Insurance Payments for such Distribution Date, and (4) Group II
Cumulative Insurance Payments for such Distribution Date covered by Loan
Group I Excess Cash Flow; and
(ii) with respect to Loan Group II, the amount of Loan Group II Excess
Cash Flow on such Distribution Date as reduced by (1) any Realized Losses
included in clause (b)(4) of the definition of Principal Distribution
Amount with respect to such Distribution Date that is attributable to Loan
Group II, (2) any Realized Losses included in clause (b)(4) of the
Principal Distribution Amount with respect to such Distribution Date that
is attributable to Loan Group I, (3) Group II Cumulative Insurance
Payments for such Distribution Date, and (4) Group I Cumulative Insurance
Payments for such Distribution Date covered by Loan Group II Excess Cash
Flow.
SUBORDINATION REDUCTION AMOUNT: With respect to any Distribution
Date and a Loan Group, an amount equal to the lesser of (a) the excess, if any,
of (x) the related Subordinated Amount that would exist following such
Distribution Date following payment of the related Principal Distribution Amount
(exclusive of any reductions thereto attributable to the related Subordinated
Reduction Amount) over (y) the related Targeted Subordinated Amount for such
Distribution Date and (b) the sum of the amounts for such Distribution Date
specified in clauses (b)(1)-(3) of the definition of Principal Distribution
Amount for such Loan Group.
SUBSERVICED MORTGAGE LOAN: Any Mortgage Loan that, at the time of reference
thereto, is subject to a Subservicing Agreement.
SUBSERVICER: Any Person with whom the Master Servicer has entered
into a Subservicing Agreement and who generally satisfied the requirements set
forth in the Program Guide in respect of the qualification of a Subservicer as
of the date of its approval as a Subservicer by the Master Servicer.
SUBSERVICER ADVANCE: Any delinquent installment of principal and
interest on a Mortgage Loan which is advanced by the related Subservicer (net of
its Subservicing Fee) pursuant to the Subservicing Agreement.
SUBSERVICING ACCOUNT: An account established by a Subservicer in accordance
with Section 3.08.
SUBSERVICING AGREEMENT: The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02, generally in the form of the
servicer contract referred to or contained in the Program Guide or in such other
form as has been approved by the Master Servicer and the Depositor.
SUBSERVICING FEE: As to any Mortgage Loan, the fee payable monthly
to the related Subservicer (or, in the case of a Nonsubserviced Mortgage Loan,
to the Master Servicer) in respect of subservicing and other compensation that
accrues with respect to each Distribution Date at an annual rate designated as
"SUBSERV FEE" in Exhibit D-1 and Exhibit D-2.
TARGETED SUBORDINATED AMOUNT: With respect to:
(A) (I) Loan Group I and any Distribution Date, an amount equal to
1.40% of THE AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE OF THE GROUP I LOANS;
PROVIDED, HOWEVER, that so long as (x) the Rolling Six Month Delinquency Rate
does not exceed 9.00%, (y) the aggregate amount of all Realized Losses on the
Mortgage Loans do not exceed the applicable Cumulative Loss Percentage of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans and (z) no claim
has been made on the Group I Policy by the Trustee, which has not been
reimbursed as Group I Cumulative Insurance Payments and Group II Cumulative
Insurance Payments pursuant to Section 4.02 within six months from the date such
claim representing an Insured Amount has been paid by the Insurer, then with
respect to any Distribution Date after the later to occur of (a) the
Distribution Date in February 2002 and (b) the last Distribution Date on which
the Stated Principal Balance of the Group I Loans, after giving effect to
distributions to be made on such Distribution Date, is greater than 50% of the
aggregate Cut-off Date Principal Balance of the Group I Loans, the Targeted
Subordinated Amount will equal the greater of (i) 2.80% of the Stated Principal
Balance of the Group I Loans immediately preceding such Distribution Date, and
(ii) 0.50% of the aggregate Cut-off Date Principal Balance of the Group I Loans.
(II) Notwithstanding the foregoing, if the Targeted Subordinated
Amount is not reduced pursuant to the previous sentence, on or after the first
Distribution Date on which the Stated Principal Balance of the Group I Loans,
after giving effect to distributions to be made on such Distribution Date, is
equal to or less than 33% of the aggregate Cut-off Date Principal Balance of the
Group I Loans and the amount of Realized Losses with respect to any Distribution
Date does not exceed 4.25% of the aggregate Cut-off Date Principal Balance of
the Mortgage Loans, the Targeted Subordination Amount shall be 4.20% of the then
outstanding aggregate Stated Principal Balance of the Group I Loans.
(III) In addition, if the Targeted Subordinated Amount was reduced
pursuant to CLAUSE (A)(I) OF THIS DEFINITION AND DURING THE PERIOD FROM AND
INCLUDING THE 25TH month AFTER THE CUT-OFF DATE THROUGH AND INCLUDING THE 42ND
month after the Cut-off Date, either (x) the Rolling Six Month Delinquency Rate
exceeds 13.5% or (y) the aggregate amount of Realized Losses with respect to any
Distribution Date exceeds the applicable Cumulative Loss Percentage of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans, the Targeted
Subordination Amount in respect of Loan Group I shall be either (i) 1.75% of the
aggregate Cut-off Date Principal Balance of the Group I Loans, if the Stated
Principal Balance of the Group I Loans, after giving effect to distributions to
be made on such Distribution Date is greater than 33% of the aggregate Cut-off
Date Principal Balance of the Group I Loans or (ii) otherwise 5.25% of the then
outstanding aggregate Stated Principal Balance of the Group I Loans.
(IV) In addition, if the Targeted Subordinated Amount was reduced
pursuant to clause (A)(I) of this definition and the aggregate amount of
Realized Losses with respect TO ANY DISTRIBUTION DATE AFTER THE 42ND
Distribution Date (i) exceeds 3.75% of the aggregate Cut-off Date Principal
Balance of the Mortgage Loans, the Targeted Subordination Amount in respect of
Loan Group I shall be 5.25% of the then outstanding aggregate Stated Principal
Balance of the Group I Loans or (ii) exceeds 4.50% of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans, the Targeted Subordination Amount in
respect of Loan Group I shall be 7.0% of the then outstanding aggregate Stated
Principal Balance of THE GROUP I LOANS, PROVIDED, HOWEVER, that if the aggregate
amount of Realized Losses with RESPECT TO ANY DISTRIBUTION DATE AFTER THE 42ND
Distribution Date is equal to or less than 3.75% of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans, the Targeted Subordination Amount shall
be reduced as set forth in clause (A)(I) of this definition; and
(B) (I) Loan Group II and any Distribution Date, an amount equal to
3.65% OF THE AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE OF THE GROUP II LOANS;
PROVIDED HOWEVER, that so long as (x) the Rolling Six Month Delinquency Rate
does not exceed 14.00%, (y) the aggregate amount of all Realized Losses on the
Mortgage Loans do not exceed the applicable Cumulative Loss Percentage of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans, and (z) no claim
has been made on the Group II Policy by the Trustee, which has not been
reimbursed as Group I Cumulative Insurance Payments and Group II Cumulative
Insurance Payments pursuant to Section 4.02 within six months from the date such
claim representing an Insured Amount has been paid by the Insurer, then with
respect to any Distribution Date after the later to occur of (a) the
Distribution Date in February 2002 and (b) the last Distribution Date on which
the Stated Principal Balance of the Group II Loans, after giving effect to
distributions to be made on such Distribution Date, is greater than 50% of the
aggregate Cut-off Date Principal Balance of the Group II Loans, the Targeted
Subordinated Amount will equal the greater of (i) 7.30% of the Stated Principal
Balance of the Group II Loans immediately preceding such Distribution Date and
(ii) 0.50% of the aggregate Cut-off Date Principal Balance of the Group II
Loans.
(II) Notwithstanding the foregoing, if the Targeted Subordinated
Amount is not reduced pursuant to the previous sentence, on or after the first
Distribution Date on which the Stated Principal Balance of the Group II Loans,
after giving effect to distributions to be made on such Distribution Date, is
equal to or less than 33% of the aggregate Cut-off Date Principal Balance of the
Group II Loans and the amount of Realized Losses with respect to any
Distribution Date does not exceed 4.25% of the aggregate Cut-off Date Principal
Balance of the Mortgage Loans, the Targeted Subordination Amount shall be 10.95%
of the then outstanding aggregate Stated Principal Balance of the Group II
Loans.
(III) In addition, if the Targeted Subordinated Amount was reduced
pursuant to CLAUSE (B)(I) OF THIS DEFINITION AND DURING THE PERIOD FROM AND
INCLUDING THE 25TH month AFTER THE CUT-OFF DATE THROUGH AND INCLUDING THE 36TH
month after the Cut-off Date, either (x) the Rolling Six Month Delinquency Rate
exceeds 21.00% or (y) the aggregate amount of Realized Losses with respect to
any Distribution Date exceeds the applicable Cumulative Loss Percentage of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans, the Targeted
Subordination Amount in respect of Loan Group II shall be either (i) 3.65% of
the aggregate Cut-off Date Principal Balance of the Group II Loans, if the
Stated Principal Balance of the Group II Loans, after giving effect to
distributions to be made on such Distribution Date is greater than 33% of the
aggregate Cut-off Date Principal Balance of the Group II Loans or (ii) otherwise
10.95% of the then outstanding aggregate Stated Principal Balance of the Group
II Loans.
(IV) In addition, if the Targeted Subordinated Amount was reduced
pursuant to clause (B)(I) of this definition and the aggregate amount of
Realized Losses with respect TO ANY DISTRIBUTION DATE AFTER THE 36TH
Distribution Date (i) exceeds 3.75% of the aggregate Cut-off Date Principal
Balance of the Mortgage Loans, the Targeted Subordination Amount in respect of
Loan Group II shall be 10.95% of the then outstanding aggregate Stated Principal
Balance of the Group II Loans or (ii) exceeds 4.50% of the aggregate Cut-off
Date Principal Balance of the Mortgage Loans, the Targeted Subordination Amount
in respect of Loan Group II shall be 14.60% of the then outstanding aggregate
Stated Principal Balance of the Group II Loans.
The Targeted Subordinated Amount may be reduced with the prior written consent
of the Insurer with notification to the Rating Agencies.
TAX RETURNS: The federal income tax returns on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to their classification as REMICs
under the REMIC Provisions, together with any and all other information, reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
TRANSFER: Any direct or indirect transfer, sale, pledge, hypothecation or
other form of assignment of any Ownership Interest in a Certificate.
TRANSFEREE: Any Person who is acquiring by Transfer any Ownership Interest
in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
TRIGGER EVENT: As of any Distribution Date, for purposes of Section 7.05,
"Trigger Events; Removal of Master Servicer," the occurrence of any of the
following scenarios:
(a) The aggregate Rolling Six-Month Delinquency Rate is
greater than 18% for the then-current Distribution Date;
(b) The aggregate Rolling Six-Month Delinquency Rate is
greater than 10% for the then-current and two preceding
Distribution Dates;
(c) The aggregate 12 Month Loss Amount is greater than or
equal to 2.75% of the aggregate Stated Principal Balance of
the Mortgage Loans; or
(d) the aggregate Realized Losses on the Mortgage Loans exceed
(a) with respect to the first 12 Distribution Dates, 2.25% of
the aggregate Cut-off Date Principal Balance, (b) with respect
to the next 12 Distribution Dates, 3.75% of the aggregate
Cut-off Date Principal Balance, (c) with respect to the next
12 Distribution Dates, 5.25% of the aggregate Cut-off Date
Principal Balance, (d) with respect to the next 12
Distribution Dates, 6.75% of the aggregate Cut-off Date
Principal Balance, and (e) with respect to all Distribution
Dates thereafter, 8.00% of the aggregate Cut-off Date
Principal Balance.
TRUST FUND: Collectively, the Basis Risk Reserve Funds and the
assets of REMIC I, REMIC II and REMIC III consisting of the segregated pool of
assets, with respect to which a REMIC election is to be made, consisting of:
(i) the Mortgage Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the Mortgage
Loans due after the Cut-off Date as shall be on deposit in the Custodial
Account or in the Certificate Account and identified as belonging to the
Trust Fund,
(iii) property which secured a Mortgage Loan and which has been
acquired for the benefit of the Certificateholders by foreclosure or deed
in lieu of foreclosure,
(iv) the hazard insurance policies and Primary Insurance Policies,
if any,
(v) the Policies,
(vi) any amounts on deposit in the Insurance Account, and
(vii) all proceeds of clauses (i) through (vi) above.
The Mortgage Loans included from time to time in the Trust Fund
shall be divided into two separate sub-trusts, one for Loan Group I and one for
Loan Group II.
12 MONTH LOSS AMOUNT: With respect to any Distribution Date, an
amount equal to the aggregate of all Realized Losses on the Mortgage Loans
during the 12 preceding Due Periods.
UNADJUSTED ACCRUED CERTIFICATE INTEREST: With respect to each
Distribution Date, as to any Adjustable Rate Certificate, interest accrued
during the related Interest Accrual Period at a rate equal to LIBOR for such
Distribution Date plus the Applicable Spread on the Certificate Principal
Balance thereof immediately prior to such Distribution Date.
UNIFORM SINGLE ATTESTATION PROGRAM FOR MORTGAGE BANKERS: The Uniform
Single Attestation Program for Mortgage Bankers, as published by the Mortgage
Bankers Association of America and effective with respect to fiscal periods
ending on or after December 15, 1995.
UNINSURED CAUSE: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies.
UNITED STATES PERSON: A citizen or resident of the United States, a
corporation or partnership (or other entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States or any political subdivision
thereof, an estate whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States Persons have the authority to control all substantial
decisions of the trust. The term "United States" shall have the meaning set
forth in Section 7701 of the Code or successor provisions.
VOTING RIGHTS: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 97% of all of the Voting
Rights shall be allocated among Holders of each Class of Class A Certificates in
proportion to the outstanding Certificate Principal Balances of their respective
Certificates; 1% and 1% of all of the Voting Rights shall be allocated among the
Holders of the Class SB-I and Class SB-II Certificates, respectively; and 1/3 of
1% of all of the Voting Rights shall be allocated among the Holders of each of
the Class R-I, Class R-II and Class R-III Certificates; in each case to be
allocated among the Certificates of such Class in accordance with their
respective Percentage Interest.
SECTION 1.02. DETERMINATION OF LIBOR
LIBOR applicable to the calculation of the Pass-Through Rate on the
Adjustable Rate Certificates for any Interest Accrual Period will be determined
on each LIBOR Rate Adjustment Date.
On each LIBOR Rate Adjustment Date, LIBOR shall be established by
the Trustee and, as to any Interest Accrual Period, will equal the rate for one
month United States dollar deposits that appears on the Telerate Screen Page
3750 as of 11:00 a.m., London time, on such LIBOR Rate Adjustment Date.
"Telerate Screen Page 3750" means the display designated as page 3750 on the
Bridge Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks). If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
LIBOR shall be so established by use of such other service for displaying LIBOR
or comparable rates as may be selected by the Trustee after consultation with
the Master Servicer and the Insurer), the rate will be the Reference Bank Rate.
The "Reference Bank Rate" will be determined on the basis of the rates at which
deposits in U.S. Dollars are offered by the reference banks (which shall be any
three major banks that are engaged in transactions in the London interbank
market, selected by the Trustee after consultation with the Master Servicer) as
of 11:00 a.m., London time, on the LIBOR Rate Adjustment Date to prime banks in
the London interbank market for a period of one month in amounts approximately
equal to the Certificate Principal Balance of the Adjustable Rate Certificates
then outstanding. The Trustee will request the principal London office of each
of the reference banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate will be the arithmetic mean of the quotations
rounded up to the next multiple of 1/16%. If on such date fewer than two
quotations are provided as requested, the rate will be the arithmetic mean of
the rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Master Servicer and the Insurer, as of 11:00
a.m., New York City time, on such date for loans in U.S. Dollars to leading
European banks for a period of one month in amounts approximately equal to the
Certificate Principal Balance of the Adjustable Rate Certificates then
outstanding. If no such quotations can be obtained, the rate will be LIBOR for
the prior Distribution Date.
The establishment of LIBOR by the Trustee on any LIBOR Rate
Adjustment Date and the Trustee's subsequent calculation of the Pass-Through
Rates applicable to the Adjustable Rate Certificates for the relevant Interest
Accrual Period, in the absence of manifest error, will be final and binding.
Promptly following each LIBOR Rate Adjustment Date the Trustee shall
supply the Master Servicer with the results of its determination of LIBOR on
such date. Furthermore, the Trustee will supply to any Certificateholder so
requesting by telephone the Pass-Through Rates on the Adjustable Rate
Certificates for the current and the immediately preceding Interest Accrual
Period.
SECTION 1.03. CERTAIN REMIC MATTERS.
(a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC
III shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The REMIC I and REMIC II Regular Interests (as defined below)
shall constitute the assets of REMIC III.
(b) REMIC I will be evidenced by (x) the Class IA-1, Class IA-2,
Class IA-3, Class IA-4, Class IA-5, Class IA-6 and Class I-M Interests (the
"REMIC I Regular Interests"), which will be uncertificated and non-transferable
and are hereby designated as the "regular interests" in REMIC I and (y) the
Class R-I Certificates, which are hereby designated as the single "residual
interest" in REMIC I (the REMIC I Regular Interests, together with the Class R-1
Certificates, the "REMIC I Interests"). The REMIC I Regular Interests shall be
recorded on the records of REMIC I as being issued to and held by the Trustee on
behalf of REMIC III.
(c) The REMIC I Interests will have the following designations,
initial principal balances and pass-through rates, and distributions of interest
thereon shall be allocated to the Class SB-I Certificates in the following
manner:
Pass- Allocations
REMIC I Initial Through of
INTERESTS BALANCE RATE INTEREST
IA-1 $220,000 (1) (2)
IA-2 $100,000 (1) (2)
IA-3 $105,000 (1) (2)
IA-4 $105,000 (1) (2)
IA-5 $55,000 (1) (2)
IA-6 $65,000 (1) (2)
I-M $649,350,000 (1) (2)
R-I $0 0% (3) NA
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(1) The pass-through rate on these REMIC I Regular Interests shall at any time
of determination equal the weighted average of the Net Mortgage Rates of
the Mortgage Loans in Loan Group I.
(2) Any interest with respect to this REMIC I Regular Interest in excess of
the product of (i) 100 times the weighted average Pass-Through Rate of the
REMIC I Regular Interests, where the Class IA-1, Class IA-2, Class IA-3,
Class IA-4, Class IA-5 and Class IA-6 Interests are first each subject to
a cap and floor equal to the Pass-Through Rates on the Class A-I-1, Class
A-I-2, Class A-I-3, Class A-I-4, Class A-I-5 and Class A-I-6 Certificates,
respectively and the Class I-M Interest is subject to a cap equal to 0%,
and (ii) the principal balance of this REMIC I Regular Interest, shall be
allocated to the Class SB-I Certificates. The Class SB-I Certificates will
also be entitled to a portion of the principal paid on the REMIC I Regular
Interests in an amount equal to the Initial Certificate Principal Balance
of the Class SB-I Certificates.
(3) On each Distribution Date, available funds, if any remaining in REMIC I
after payments of interest and principal, as designated above, and
expenses of the Trust that are payable from the Group I Loans will be
distributed to the Class R-I Certificates. It is expected that there will
not be any distributions on the Class R-I Certificates.
(d) The Subordination Increase Amount for Loan Group I will not be
paid directly as principal to the REMIC I Regular Interests, but instead a
portion of the interest payable with respect to the Class I-M Interest which
equals 1% of such Subordination Increase Amount will be payable as a reduction
of the principal balances of the Class IA-1, Class IA-2, Class IA-3, Class IA-4,
Class IA-5 and Class IA-6 Interests, in the same manner in which the
Subordination Increase Amount is allocated among the Class A-I-1, Class A-I-2,
Class A-I-3, Class A-I-4, Class A-I-5 and Class A-I-6 Certificates, respectively
(and will be accrued and added to the principal balance of the Class I-M
Interest). Principal payments on the Group I Loans shall be allocated 99% to the
Class I-M Interest, and 1% to the other REMIC I Regular Interests, until paid in
full. The aggregate amount of principal allocated among the Class IA-1, Class
IA-2, Class IA-3, Class IA-4, Class IA-5 and Class IA-6 Interests shall be
apportioned among such Interests in the same manner in which principal on the
Group I Loans is payable with respect to the Class A-I-1, Class A-I-2, Class
A-I-3, Class A-I-4, Class A-I-5 and Class A-I-6 Certificates, respectively.
Notwithstanding the above, principal payments that are attributable to the
Subordination Reduction Amount for Loan Group I shall be allocated to the Class
I-M Interest (until paid in full). Realized losses shall be applied such that
after all distributions have been made on each Distribution Date (i) the
principal balances of the Class IA-1, Class IA-2, Class IA-3, Class IA-4, Class
IA-5 and Class IA-6 Interests are each 1% of the principal balances of the Class
A-I-1, Class A-I-2, Class A-I-3, Class A-I-4, Class A-I-5 and Class A-I-6
Certificates, respectively; and (ii) the principal balance of the Class I-M
Interest is equal to the Loan Group I Stated Principal Balance, less an amount
equal to the sum of the principal balances of the REMIC I Regular Interests,
other than the Class I-M Interest.
(e) REMIC II will be evidenced by (x) the Class II-A and Class II-M
Interests (the "REMIC II Regular Interests"), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in REMIC
II and (y) the Class R-II Certificates, which are hereby designated as the
single "residual interest" in REMIC II (the REMIC II Regular Interests, together
with the Class R-II Certificates, the "REMIC II Interests"). The REMIC II
Regular Interests shall be recorded on the records of REMIC II as being issued
to and held by the Trustee on behalf of REMIC III.
(f) The REMIC II Interests will have the following designations,
initial principal balances and pass-through rates, and distributions of interest
thereon shall be allocated to the Class SB-II Certificates in the following
manner:
Pass- Allocation
REMIC II Initial Through of
INTERESTS BALANCE RATE INTEREST
II-A $650,000 (1) (2)(3)
II-M $649,350,000 (1) (3)
R-II $0 0% N/A
- ---------------
(1) The pass-through rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average of the Net Mortgage Rates
of the Mortgage Loans in Loan Group II.
(2) Except as provided in note (3), interest will be allocated among the Class
II-A Interests in the same proportion as interest is payable on the
corresponding Certificates.
(3) Any interest with respect to this REMIC II Regular Interest in excess of
the product of (i) 100 times the weighted average Pass-Through Rate of the
Class II-A and Class II-M Interests, where the Class II-A Interests are
first subject to a cap and floor equal to the Pass-Through Rate on the
Class A-II Certificates, and the Class II-M Interest is subject to a cap
equal to 0%, and (ii) the principal balance of this REMIC II Regular
Interest, shall be allocated to the Class SB-II Certificates. The Class
SB-II Certificates will also be entitled to a portion of the principal
paid on the REMIC II Regular Interests in an amount equal to the Initial
Certificate Principal Balance of the Class SB-II Certificates.
(g) The Subordination Increase Amount for Loan Group II will not be
paid directly as principal to the REMIC II Regular Interests, but instead a
portion of the interest payable with respect to the Class II-M Interest which
equals 1% of such Subordinated Increase Amount will be payable as a reduction of
the principal balances of the Class II-A Interests (and will be accrued and
added to principal on the Class II-M Interest). Principal payments on the Group
II Loans shall be allocated 99% to the Class II-M Interest and 1% to the Class
II-A Interests, until paid in full. The aggregate amount of principal allocated
to the Class II-A Interests shall be apportioned in the same manner as principal
is payable with respect to the Class II-A Certificates. Notwithstanding the
above, principal payments that are attributable to the Subordination Reduction
Amount for Loan Group II shall be allocated to the Class II-M Interests (until
paid in full). Realized losses shall be applied such that after all
distributions have been made on such Distribution Date (i) the principal balance
of the Class II-A Interests are each 1% of the principal balances of the Class
II-A Certificates, respectively; and (ii) the aggregate principal balance of the
Class II-M Interest is equal to the Loan Group II Stated Principal Balance, less
the amount computed in (i).
(h) The Maturity Dates of the REMIC I Regular Interests, REMIC II
Regular Interests and REMIC III Regular Interests is February 28, 2035.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. CONVEYANCE OF MORTGAGE LOANS.
(a) The Depositor, concurrently with the execution and delivery
hereof, does hereby assign to the Trustee without recourse all the right, title
and interest of the Depositor in and to the Mortgage Loans, including all
interest and principal received on or with respect to the Mortgage Loans after
the Cut-off Date (other than payments of principal and interest due on each
Mortgage Loan on or before the Due Date in the month of the Cut-off Date). The
Mortgage Loans that from time to time constitute part of the Trust Fund shall be
divided into two separate sub-trusts, one for Loan Group I and one for Loan
Group II.
(b) In connection with such assignment, and contemporaneously with
the delivery of this Agreement the Depositor delivered or caused to be delivered
hereunder to the Trustee the Policies, and except as set forth in Section
2.01(c) below, the Depositor does hereby deliver to, and deposit with, the
Trustee, or to and with one or more Custodians, as the duly appointed agent or
agents of the Trustee for such purpose, the following documents or instruments
(or copies thereof as permitted by this Section) with respect to each Mortgage
Loan so assigned:
(i) The original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of endorsements
from the originator thereof to the Person endorsing it to the Trustee, or
with respect to any Destroyed Mortgage Note, an original lost note
affidavit from the related Seller or Residential Funding stating that the
original Mortgage Note was lost, misplaced or destroyed, together with a
copy of the related Mortgage Note;
(ii) The original Mortgage, noting the presence of the MIN of
the Mortgage Loan and language indicating that the Mortgage Loan is a MOM
Loan if the Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded;
(iii) Unless the Mortgage Loan is registered on the MERS(R)
Systems, an original Assignment of the Mortgage to the Trustee with
evidence of recording indicated thereon or a copy of such assignment
certified by the public recording office in which such assignment has been
recorded;
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof to
the Person assigning it to the Trustee (or to MERS, if the Mortgage Loan
is registered on the MERS(R) System and noting the presence of a MIN) with
evidence of recordation noted thereon or attached thereto, or a copy of
such assignment or assignments of the Mortgage certified by the public
recording office in which such assignment or assignments have been
recorded; and
(v) The original of each modification, assumption agreement or
preferred loan agreement, if any, relating to such Mortgage Loan or a copy
of each modification, assumption agreement or preferred loan agreement
certified by the public recording office in which such document has been
recorded.
(c) The Depositor may, in lieu of delivering the documents set forth
in Section 2.01(b)(iv) and (v) to the Trustee or the Custodian or Custodians,
deliver such documents to the Master Servicer, and the Master Servicer shall
hold such documents in trust for the use and benefit of all present and future
Certificateholders and the Insurer until such time as is set forth below. Within
ten Business Days following the earlier of (i) the receipt of the original of
each of the documents or instruments set forth in Section 2.01(b)(iv) and (v)
(or copies thereof as permitted by such Section) for any Mortgage Loan and (ii)
a written request by the Trustee to deliver those documents with respect to any
or all of the Mortgage Loans then being held by the Master Servicer, the Master
Servicer shall deliver a complete set of such documents to the Trustee or the
Custodian or Custodians that are the duly appointed agent or agents of the
Trustee.
On the Closing Date, the Master Servicer shall certify that it has
in its possession an original or copy of each of the documents referred to in
Section 2.01(b)(iv) and (v) which has been delivered to it by the Depositor.
(d) In the event that in connection with any Mortgage Loan the
Depositor cannot deliver the Mortgage, any assignment, modification, assumption
agreement or preferred loan agreement (or copy thereof certified by the public
recording office) with evidence of recording thereon concurrently with the
execution and delivery of this Agreement solely because of a delay caused by the
public recording office where such Mortgage, assignment, modification,
assumption agreement or preferred loan agreement, as the case may be, has been
delivered for recordation, the Depositor shall deliver or cause to be delivered
to the Trustee or the respective Custodian a true and correct photocopy of such
Mortgage, assignment, modification, assumption agreement or preferred loan
agreement.
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except (a) in states where, in the opinion of counsel
acceptable to the Trustee, the Insurer and the Master Servicer, such recording
is not required to protect the Trustee's interests in the Mortgage Loan against
the claim of any subsequent transferee or any successor to or creditor of the
Depositor or the originator of such Mortgage Loan or (b) if MERS is identified
on the Mortgage or on a properly recorded assignment of the Mortgage as the
mortgagee of record solely as nominee for the Seller and its successors and
assigns.
In connection with the assignment of any Mortgage Loan registered on
the MERS(R) System, the Depositor further agrees that it will cause, at the
Depositor's own expense, on or prior to the Closing Date, the MERS(R) System to
indicate that such Mortgage Loans have been assigned by the Depositor to the
Trustee in accordance with this Agreement for the benefit of the
Certificateholders and the Insurer by including (or deleting, in the case of
Mortgage Loans which are repurchased in accordance with this Agreement) in such
computer files (a) the code "[IDENTIFY TRUSTEE SPECIFIC CODE]" in the field
"[IDENTIFY THE FIELD NAME FOR TRUSTEE]" which identifies the Trustee and (b) the
code "[IDENTIFY SERIES SPECIFIC CODE NUMBER]" in the field "Pool Field" which
identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Depositor further agrees that it will not, and will not
permit the Master Servicer to, and the Master Servicer agrees that it will not,
alter the codes referenced in this paragraph with respect to any Mortgage Loan
during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement.
(e) It is intended that the conveyances by the Depositor to the
Trustee of the Mortgage Loans as provided for in this Section 2.01 be and be
construed as a sale by the Depositor to the Trustee of the Mortgage Loans for
the benefit of the Certificateholders. Further, it is not intended that any such
conveyance be deemed to be a pledge of the Mortgage Loans by the Depositor to
the Trustee to secure a debt or other obligation of the Depositor. However, in
the event that the Mortgage Loans are held to be property of the Depositor or of
Residential Funding, or if for any reason this Agreement is held or deemed to
create a security interest in the Mortgage Loans, then it is intended that (a)
this Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the New York Uniform Commercial Code and the
Uniform Commercial Code of any other applicable jurisdiction; (b) the
conveyances provided for in this Section 2.01 shall be deemed to be (1) a grant
by the Depositor to the Trustee of a security interest in all of the Depositor's
right (including the power to convey title thereto), title and interest, whether
now owned or hereafter acquired, in and to (A) the Mortgage Loans, including
with respect to each Mortgage Loan, the Mortgage Notes, the Mortgages, (B) any
related insurance policies and all other documents in the related Mortgage
Files, (C) all amounts payable pursuant to the Mortgage Loans in accordance with
the terms thereof and (D) any and all general intangibles, accounts, chattel
paper, instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, advices of credit and investment property consisting
of, arising from or relating to any of the foregoing, and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts from time
to time held or invested in the Certificate Account or the Custodial Account,
whether in the form of cash, instruments, securities or other property and (2)
an assignment by the Depositor to the Trustee of any security interest in any
and all of Residential Funding's right (including the power to convey title
thereto), title and interest, whether now owned or hereafter acquired, in and to
the property described in the foregoing clauses (1)(A), (B), (C) and (D) granted
by Residential Funding to the Depositor pursuant to the Assignment Agreement;
(c) the possession by the Trustee, the Custodian or any other agent of the
Trustee of Mortgage Notes or such other items of property as constitute
instruments, money, negotiable documents, goods, letters of credit, advices of
credit, certificated securities or chattel paper shall be deemed to be
"possession by the secured party," or possession by a purchaser for purposes of
perfecting the security interest pursuant to the Minnesota Uniform Commercial
Code and the Uniform Commercial Code of any other applicable jurisdiction
(including, without limitation, Section 9-305, and 9-115 thereof); and (d)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, securities
intermediaries, bailees or agents of, or persons holding for (as applicable) the
Trustee for the purpose of perfecting such security interest under applicable
law.
The Depositor and, at the Depositor's direction, Residential Funding
and the Trustee shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and the other
property described above, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement. Without limiting the
generality of the foregoing, the Depositor shall prepare and deliver to the
Trustee not less than 15 days prior to any filing date and, the Trustee shall
forward for filing, or shall cause to be forwarded for filing, at the expense of
the Depositor, all filings necessary to maintain the effectiveness of any
original filings necessary under the Uniform Commercial Code as in effect in any
jurisdiction to perfect the Trustee's security interest in or lien on the
Mortgage Loans as evidenced by an Officer's Certificate of the Depositor, with a
copy delivered to the Insurer, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any change
of name of Residential Funding, the Depositor or the Trustee (such preparation
and filing shall be at the expense of the Trustee, if occasioned by a change in
the Trustee's name), (2) any change of location of the place of business or the
chief executive office of Residential Funding or the Depositor or (3) any
transfer of any interest of Residential Funding or the Depositor in any Mortgage
Loan.
SECTION 2.02. ACCEPTANCE BY TRUSTEE.
The Trustee acknowledges receipt (or, with respect to Mortgage Loans
subject to a Custodial Agreement, and based solely upon a receipt or
certification executed by the Custodian, receipt by the respective Custodian as
the duly appointed agent of the Trustee) of the documents referred to in Section
2.01(b)(i) through (iii) above (except that for purposes of such acknowledgment
only, a Mortgage Note may be endorsed in blank and an Assignment of Mortgage may
be in blank) and declares that it, or a Custodian as its agent, holds and will
hold such documents and the other documents constituting a part of the Mortgage
Files delivered to it, or a Custodian as its agent, in trust for the use and
benefit of all present and future Certificateholders. The Trustee or Custodian
(such Custodian being so obligated under a Custodial Agreement) agrees, for the
benefit of Certificateholders, to review each Mortgage File delivered to it
pursuant to Section 2.01(b) within 45 days after the Closing Date to ascertain
that all required documents (specifically as set forth in Section 2.01(b)), have
been executed and received, and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, as supplemented, that have been
conveyed to it. Upon delivery of the Mortgage Files by the Depositor or the
Master Servicer, the Trustee shall acknowledge receipt (or, with respect to
Mortgage Loans subject to a Custodial Agreement, and based solely upon a receipt
or certification executed by the Custodian, receipt by the respective Custodian
as the duly appointed agent of the Trustee) of the documents referred to in
Section 2.01(c) above. The Trustee or Custodian (such Custodian being so
obligated under a Custodial Agreement) agrees to review each Mortgage File
delivered to it pursuant to Section 2.01(c) within 45 days after receipt thereof
to ascertain that all documents required to be delivered pursuant to such
Section have been received, and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, as supplemented, that have been
conveyed to it.
If the Custodian, as the Trustee's agent, finds any document or
documents constituting a part of a Mortgage File to be missing or defective, the
Trustee shall promptly notify the Master Servicer and the Depositor; provided,
that if the Mortgage Loan related to such Mortgage File is listed on Schedule A
of Exhibit One of the Custodial Agreement, no notification shall be necessary.
Pursuant to Section 2.3 of the Custodial Agreement, the Custodian will notify
the Master Servicer, the Depositor and the Trustee of any such omission or
defect found by it in respect of any Mortgage File held by it. If such omission
or defect materially and adversely affects the interests in the related Mortgage
Loan of the Certificateholders or the Insurer, the Master Servicer shall
promptly notify the related Subservicer or Seller of such omission or defect and
request that such Subservicer or Seller correct or cure such omission or defect
within 60 days from the date the Master Servicer was notified of such omission
or defect and, if such Subservicer or Seller does not correct or cure such
omission or defect within such period, that such Subservicer or Seller purchase
such Mortgage Loan from REMIC I or REMIC II, as applicable, at its Purchase
Price, in either case within 90 days from the date the Master Servicer was
notified of such omission or defect; provided that if the omission or defect
would cause the Mortgage Loan to be other than a "qualified mortgage" as defined
in Section 860G(a)(3) of the Code, any such cure or repurchase must occur within
90 days from the date such breach was discovered. The Purchase Price for any
such Mortgage Loan, whether purchased by the Seller or the Subservicer, shall be
deposited or caused to be deposited by the Master Servicer in the Custodial
Account maintained by it pursuant to Section 3.07 and, upon receipt by the
Trustee of written notification of such deposit signed by a Servicing Officer,
the Trustee or any Custodian, as the case may be, shall release to the Master
Servicer the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment prepared by the Master Servicer, in
each case without recourse, as shall be necessary to vest in the Seller or its
designee or the Subservicer or its designee, as the case may be, any Mortgage
Loan released pursuant hereto and thereafter such Mortgage Loan shall not be
part of the Trust Fund. In furtherance of the foregoing, if the Subservicer or
Seller that repurchases the Mortgage Loan is not a member of MERS and the
Mortgage is registered on the MERS(R) System, the Master Servicer, at its own
expense and without any right of reimbursement, shall cause MERS to execute and
deliver an assignment of the Mortgage in recordable form to transfer the
Mortgage from MERS to such Subservicer or Seller and shall cause such Mortgage
to be removed from registration on the MERS(R) System IN ACCORDANCE WITH MERS'
RULES AND REGULATIONS. It is understood and agreed that the obligation of the
Seller or the Subservicer, as the case may be, to so cure or purchase any
Mortgage Loan as to which a material and adverse defect in or omission of a
constituent document exists shall constitute the sole remedy respecting such
defect or omission available to Certificateholders or the Trustee on behalf of
Certificateholders (except for the Insurer's rights, under the Insurance
Agreement). Notwithstanding the foregoing, it is understood and agreed that the
Master Servicer shall use its best efforts to substitute, within 60 days of the
Closing Date, Qualified Substitute Mortgage Loans to replace any of the Mortgage
Loans identified in Schedule I hereto with respect to which any documents or
documents constituting a part of the Mortgage File are missing or defective in
any material respect if the Master Servicer cannot cure such omission or defect
within such 60 day period.
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER AND THE DEPOSITOR.
(a) The Master Servicer hereby represents and warrants to the
Trustee for the benefit of the Certificateholders and the Insurer that:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws governing its
creation and existence and is or will be in compliance with the laws of
each state in which any Mortgaged Property is located to the extent
necessary to ensure the enforceability of each Mortgage Loan in accordance
with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by the
Master Servicer and its performance and compliance with the terms of this
Agreement will not violate the Master Servicer's Certificate of
Incorporation or Bylaws or constitute a material default (or an event
which, with notice or lapse of time, or both, would constitute a material
default) under, or result in the material breach of, any material
contract, agreement or other instrument to which the Master Servicer is a
party or which may be applicable to the Master Servicer or any of its
assets;
(iii) This Agreement, assuming due authorization, execution
and delivery by the Trustee and the Depositor, constitutes a valid, legal
and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally and to general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(iv) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Master Servicer or its
properties or might have consequences that would materially adversely
affect its performance hereunder;
(v) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement;
(vi) The Master Servicer will comply in all material respects
in the performance of this Agreement with all reasonable rules and
requirements of each insurer under each Required Insurance Policy;
(vii) No information, certificate of an officer, statement
furnished in writing or report delivered to the Depositor, any Affiliate
of the Depositor or the Trustee by the Master Servicer will, to the
knowledge of the Master Servicer, contain any untrue statement of a
material fact or omit a material fact necessary to make the information,
certificate, statement or report not misleading;
(viii) The Master Servicer has examined each existing, and
will examine each new, Subservicing Agreement and is or will be familiar
with the terms thereof. The terms of each existing Subservicing Agreement
and each designated Subservicer are acceptable to the Master Servicer and
any new Subservicing Agreements will comply with the provisions of Section
3.02; and
(ix) The Master Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the Mortgage Loans that are
registered with MERS.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03(a) shall survive delivery of the respective Mortgage Files to
the Trustee or any Custodian.
Upon discovery by either the Depositor, the Master Servicer, the
Insurer, the Trustee or any Custodian of a breach of any representation or
warranty set forth in this Section 2.03(a) which materially and adversely
affects the interests of the Certificateholders or the Insurer in any Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties (any Custodian being so obligated under a Custodial Agreement).
Within 90 days of its discovery or its receipt of notice of such breach, the
Master Servicer shall either (i) cure such breach in all material respects or
(ii) to the extent that such breach is with respect to a Mortgage Loan or a
related document, purchase such Mortgage Loan from the Trust Fund at the
Purchase Price and in the manner set forth in Section 2.02; provided that if the
breach would cause the Mortgage Loan to be other than a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code, any such cure must occur within 90
days from the date such breach was discovered. The obligation of the Master
Servicer to cure such breach or to so purchase such Mortgage Loan shall
constitute the sole remedy in respect of a breach of a representation and
warranty set forth in this Section 2.03(a) available to the Certificateholders
or the Trustee on behalf of the Certificateholders (except for the Insurer's
rights under Section 3.03 of the Insurance Agreement).
(b) The Depositor hereby represents and warrants to the Trustee for
the benefit of Certificateholders and the Insurer that, immediately prior to the
assignment of the Mortgage Loans to the Trustee, the Depositor had good title
to, and was the sole owner of, each Mortgage Loan free and clear of any pledge,
lien, encumbrance or security interest (other than rights to servicing and
related compensation) and such assignment validly transfers ownership of the
Mortgage Loans to the Trustee free and clear of any pledge, lien, encumbrance or
security interest.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03(b) shall survive delivery of the respective Mortgage Files to
the Trustee or any Custodian.
Upon discovery by any of the Depositor, the Master Servicer, the
Insurer, the Trustee or any Custodian of a breach of any of the representations
and warranties set forth in this Section 2.03(b) which materially and adversely
affects the interests of the Certificateholders or the Insurer in any Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties (including the Insurer) (any Custodian being so obligated under a
Custodial Agreement). Within 90 days of its discovery or its receipt of notice
of breach, the Depositor shall either (i) cure such breach in all material
respects or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section 2.02; provided that the Depositor
shall have the option to substitute a Qualified Substitute Mortgage Loan or
Loans for such Mortgage Loan if such substitution occurs within two years
following the Closing Date; provided that if the breach would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such cure or repurchase must occur within 90 days from the date
such breach was discovered. Any such substitution shall be effected by the
Depositor under the same terms and conditions as provided in Section 2.04 for
substitutions by Residential Funding. It is understood and agreed that the
obligation of the Depositor to cure such breach or to so purchase or substitute
for any Mortgage Loan as to which such a breach has occurred and is continuing
shall constitute the sole remedy respecting such breach available to
Certificateholders (other than the Insurer) or the Trustee on behalf of
Certificateholders (other than the Insurer). Notwithstanding the foregoing, the
Depositor shall not be required to cure breaches or purchase or substitute for
Mortgage Loans as provided in this Section 2.03(b) if the substance of the
breach of a representation set forth above also constitutes fraud in the
origination of the Mortgage Loan.
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF SELLERS; ADDITIONAL
REPRESENTATIONS AND WARRANTIES OF RESIDENTIAL FUNDING.
The Depositor, as assignee of Residential Funding under the
Assignment Agreement, hereby assigns to the Trustee for the benefit of the
Certificateholders all of its right, title and interest in respect of the
Assignment Agreement and each Seller's Agreement applicable to a Mortgage Loan.
Insofar as the Assignment Agreement or such Seller's Agreement relates to the
representations and warranties made by Residential Funding or the related Seller
in respect of such Mortgage Loan and any remedies provided thereunder for any
breach of such representations and warranties, such right, title and interest
may be enforced by the Master Servicer on behalf of the Trustee and the
Certificateholders. Upon the discovery by the Depositor, the Master Servicer,
the Trustee, the Insurer or any Custodian of a breach of any of the
representations and warranties made in a Seller's Agreement or the Assignment
Agreement in respect of any Mortgage Loan which materially and adversely affects
the interests of the Certificateholders or the Insurer in such Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
parties (including the Insurer) (any Custodian being so obligated under a
Custodial Agreement). The Master Servicer shall promptly notify the related
Seller and Residential Funding, of such breach and request that such Seller or
Residential Funding, as the case may be, either (i) cure such breach in all
material respects within 90 days from the date the Master Servicer was notified
of such breach or (ii) purchase such Mortgage Loan from the Trust Fund at the
Purchase Price and in the manner set forth in Section 2.02. Residential Funding
hereby additionally represents and warrants to the Trustee for the benefit of
the Certificateholders and the Insurer each of the representations and
warranties set forth in Exhibit N hereto. Upon the discovery by the Depositor,
the Master Servicer, the Trustee, the Insurer or any Custodian of a breach of
any of such representations and warranties in respect of any Mortgage Loan which
materially and adversely affects the interests of the Certificateholders or the
Insurer in such Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties and the Insurer (any Custodian being
so obligated under a Custodial Agreement) at the same time as notice is given
pursuant to the preceding paragraph of corresponding breach of representation or
warranty made in Seller's Agreement. The Master Servicer shall promptly notify
Residential Funding of such breach and request that Residential Funding either
(i) cure such breach in all material respects within 90 days from the date the
Master Servicer was notified of such breach or (ii) purchase such Mortgage Loan
from the Trust Fund within 90 days of the date of such written notice of such
breach at the Purchase Price and in the manner set forth in Section 2.02 in the
event that the Mortgage Loan has not been purchased by the Seller due to a
breach of representation and warranty of the related Seller's Agreement as set
forth in the preceding paragraph; provided that Residential Funding shall have
the option to substitute a Qualified Substitute Mortgage Loan or Loans for such
Mortgage Loan if such substitution occurs within two years following the Closing
Date; provided that if the breach would cause the Mortgage Loan to be other than
a "qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such
cure or substitution must occur within 90 days from the date the breach was
discovered. In the event that Residential Funding elects to substitute a
Qualified Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant
to this Section 2.04, Residential Funding shall deliver to the Trustee for the
benefit of the Certificateholders with respect to such Qualified Substitute
Mortgage Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment
of the Mortgage in recordable form, and such other documents and agreements as
are required by Section 2.01, with the Mortgage Note endorsed as required by
Section 2.01. No substitution will be made in any calendar month after the
Determination Date for such month. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution shall not be
part of the Trust Fund and will be retained by the Master Servicer and remitted
by the Master Servicer to Residential Funding on the next succeeding
Distribution Date. For the month of substitution, distributions to the
Certificateholders will include the Monthly Payment due on a Deleted Mortgage
Loan for such month and thereafter Residential Funding shall be entitled to
retain all amounts received in respect of such Deleted Mortgage Loan. The Master
Servicer shall amend or cause to be amended the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Qualified Substitute Mortgage Loan or
Loans and the Master Servicer shall deliver the amended Mortgage Loan Schedule
to the Trustee. Upon such substitution, the Qualified Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement and the related
Subservicing Agreement in all respects, the related Seller shall be deemed to
have made the representations and warranties with respect to the Qualified
Substitute Mortgage Loan made in the related Seller Agreements as of the date of
substitution, Residential Funding shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute Mortgage
Loan contained in Exhibit N hereto, as of the date of substitution, and the
covenants, representations and warranties set forth in this Section 2.04, and in
Section 2.03(b) hereof.
In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (in each case after application of the principal portion
of the Monthly Payments due in the month of substitution that are to be
distributed to Certificateholders in the month of substitution). Residential
Funding shall deposit the amount of such shortfall into the Custodial Account on
the day of substitution, without any reimbursement therefor. Residential Funding
shall give notice in writing to the Trustee of such event, which notice shall be
accompanied by an Officers' Certificate as to the calculation of such shortfall
and (subject to Section 10.01(f)) by an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code or (b) any portion of the
Trust Fund to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
It is understood and agreed that the obligation of the Seller or
Residential Funding, as the case may be, to cure such breach or purchase (or in
the case of Residential Funding to substitute for) such Mortgage Loan as to
which such a breach has occurred and is continuing shall constitute the sole
remedy respecting such breach available to Certificateholders (other than the
Insurer) or the Trustee on behalf of Certificateholders (other than the
Insurer). If the Master Servicer is Residential Funding, then the Trustee shall
also have the right to give the notification and require the purchase or
substitution provided for in the second preceding paragraph in the event of such
a breach of a representation or warranty made by Residential Funding in the
Assignment Agreement. In connection with the purchase of or substitution for any
such Mortgage Loan by Residential Funding, the Trustee shall assign to
Residential Funding all of the right, title and interest in respect of the
Seller's Agreement and the Assignment Agreement applicable to such Mortgage
Loan.
SECTION 2.05. EXECUTION AND AUTHENTICATION OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to it, or any Custodian on its behalf,
subject to any exceptions noted, together with the assignment to it of all other
assets included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
has executed and caused to be authenticated and delivered to or upon the order
of the Depositor the Certificates in authorized denominations which evidence
ownership of the entire Trust Fund.
SECTION 2.06. CONVERTIBLE MORTGAGE LOANS.
(a) On or before the Certificate Account Deposit Date in the month
following the month in which a Convertible Mortgage Loan becomes a Converted
Mortgage Loan, Residential Funding shall repurchase such Converted Mortgage Loan
for an amount equal to the Purchase Price therefor. Residential Funding shall
cause such Purchase Price to be delivered to the Master Servicer for deposit in
the Certificate Account.
(b) Upon payment of the Purchase Price, the Trustee shall reconvey
the applicable Converted Mortgage Loan, without recourse, to Residential Funding
or its designee and release or cause the Custodian to release the related
Mortgage File to the order of Residential Funding.
(c) Notwithstanding that a Convertible Mortgage Loan becomes a
Converted Mortgage Loan in any month, such Converted Mortgage Loan shall remain
in the Trust Fund and all payments of principal and interest in respect thereof
shall remain in the Trust unless and until such Converted Mortgage Loan is
repurchased by Residential Funding.
(d) The obligation of Residential Funding provided in Section
2.06(a) shall terminate without further action upon the bankruptcy or insolvency
of Residential Funding.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. MASTER SERVICER TO ACT AS SERVICER.
(a) The Master Servicer shall service and administer the Mortgage
Loans in accordance with the terms of this Agreement and the respective Mortgage
Loans and in a manner consistent with industry practice and shall have full
power and authority, acting alone or through Subservicers as provided in Section
3.02, to do any and all things which it may deem necessary or desirable in
connection with such servicing and administration. Without limiting the
generality of the foregoing, the Master Servicer in its own name or in the name
of a Subservicer is hereby authorized and empowered by the Trustee when the
Master Servicer or the Subservicer, as the case may be, believes it appropriate
in its best judgment, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, or of
consent to assumption or modification in connection with a proposed conveyance,
or of assignment of any Mortgage and Mortgage Note in connection with the
repurchase of a Mortgage Loan and all other comparable instruments, or with
respect to the modification or re-recording of a Mortgage for the purpose of
correcting the Mortgage, the subordination of the lien of the Mortgage in favor
of a public utility company or government agency or unit with powers of eminent
domain, the taking of a deed in lieu of foreclosure, the completion of judicial
or non-judicial foreclosure, the conveyance of a Mortgaged Property to the
related insurer, the acquisition of any property acquired by foreclosure or deed
in lieu of foreclosure, or the management, marketing and conveyance of any
property acquired by foreclosure or deed in lieu of foreclosure with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. The Master
Servicer further is authorized and empowered by the Trustee, on behalf of the
Certificateholders and the Trustee, in its own name or in the name of the
Subservicer, when the Master Servicer or the Subservicer, as the case may be,
believes it appropriate in its best judgment to register any Mortgage Loan on
the MERS(R) System, or cause the removal from the registration of any Mortgage
Loan on the MERS(R) System, to execute and deliver, on behalf of the Trustee and
the Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns. Any expenses incurred in connection with the actions
described in the preceding sentence shall be borne by the Master Servicer in
accordance with Section 3.16(c), with no right of reimbursement; provided, that
if, as a result of MERS discontinuing or becoming unable to continue operations
in connection with the MERS System, it becomes necessary to remove any Mortgage
Loan from registration on the MERS System and to arrange for the assignment of
the related Mortgages to the Trustee, then any related expenses shall be
reimbursable to the Master Servicer. If the Mortgage relating to a Mortgage Loan
did not have a lien senior to the Mortgage Loan on the related Mortgaged
Property as of the Cut-off Date, then the Master Servicer, in such capacity, may
not consent to the placing of a lien senior to that of the Mortgage on the
related Mortgaged Property. If the Mortgage relating to a Mortgage Loan had a
lien senior to the Mortgage Loan on the related Mortgaged Property as of the
Cut-off Date, then the Master Servicer, in such capacity, may consent to the
refinancing of the PRIOR SENIOR LIEN; PROVIDED that (i) the resulting Combined
Loan-to-Value Ratio of such Mortgage Loan is no higher than the greater of the
Combined Loan-to-Value Ratio prior to such refinancing or 70% (or 80% for those
borrowers with a FICO "credit score" of 670 or greater), (ii) the interest rate
for the loan evidencing the refinanced senior lien is no higher than the
interest rate on the loan evidencing the existing senior lien immediately PRIOR
TO THE DATE OF SUCH REFINANCING; PROVIDED, HOWEVER, if the loan evidencing the
existing senior lien prior to the date of refinancing has an adjustable rate and
the loan evidencing the refinanced senior lien has a fixed rate, then the loan
evidencing the refinanced senior lien may be up to 2.0% higher than the
then-current mortgage rate of the loan evidencing the existing senior lien and
(iii) the loan evidencing the refinanced senior lien is not subject to negative
amortization.
The Master Servicer will, to the extent consistent with the
servicing standards set forth herein, take whatever actions as may be necessary
to file a claim under or enforce or allow the Trustee to file a claim under or
enforce any title insurance policy with respect to any Mortgage Loan including,
without limitation, joining in or causing any Seller or Subservicer (or any
other party in possession of any title insurance policy) to join in any claims
process, negotiations, actions or proceedings necessary to make a claim under or
enforce any title insurance policy. Notwithstanding anything in this Agreement
to the contrary, the Master Servicer shall not (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) make or permit any modification,
waiver, or amendment of any term of any Mortgage Loan that would both (i) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
(other than in connection with a proposed conveyance or assumption of such
Mortgage Loan that is treated as a Principal Prepayment in Full pursuant to
Section 3.13(d) hereof) and (ii) cause any REMIC formed hereunder to fail to
qualify as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions" after the startup date under the REMIC
Provisions. The Trustee shall furnish the Master Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans. In servicing and
administering any Nonsubserviced Mortgage Loan, the Master Servicer shall act
reasonably and in good faith and, to the extent not inconsistent with this
Agreement, comply with the Program Guide as if it were the originator of such
Mortgage Loan and had retained the servicing rights and obligations in respect
thereof.
In connection with servicing and administering the Mortgage Loans,
the Master Servicer and any Affiliate of the Master Servicer may perform
services such as appraisals and brokerage services that are not customarily
provided by servicers of mortgage loans, and shall be entitled to reasonable
compensation therefor in accordance with Section 3.10.
(b) All costs incurred by the Master Servicer or by Subservicers in
effecting the timely payment of taxes and assessments on the properties subject
to the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such costs shall be recoverable to the extent permitted by Section
3.10(a)(ii).
SECTION 3.02. SUBSERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUBSERVICERS; ENFORCEMENT OF SUBSERVICERS' AND SELLERS' OBLIGATIONS.
(a) The Master Servicer may continue in effect Subservicing
Agreements entered into by Residential Funding and Subservicers prior to the
execution and delivery of this Agreement, and may enter into new Subservicing
Agreements with Subservicers, for the servicing and administration of all or
some of the Mortgage Loans. Each Subservicer shall be either (i) an institution
the accounts of which are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing mortgage loans, and in
either case shall be authorized to transact business in the state or states in
which the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Subservicer to perform its
obligations hereunder and under the Subservicing Agreement, and in either case
shall be a FHLMC, FNMA or HUD approved mortgage servicer. Each Subservicer of a
Mortgage Loan shall be entitled to receive and retain, as provided in the
related Subservicing Agreement and in Section 3.07, the related Subservicing Fee
from payments of interest received on such Mortgage Loan after payment of all
amounts required to be remitted to the Master Servicer in respect of such
Mortgage Loan. For any Mortgage Loan that is a Nonsubserviced Mortgage Loan, the
Master Servicer shall be entitled to receive and retain an amount equal to the
Subservicing Fee from payments of interest. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Master Servicer in servicing the Mortgage Loans include actions taken or to be
taken by a Subservicer on behalf of the Master Servicer. Each Subservicing
Agreement will be upon such terms and conditions as are generally required by,
permitted by or consistent with the Program Guide and are not inconsistent with
this Agreement and as the Master Servicer and the Subservicer have agreed. With
the approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain obligated
under the related Subservicing Agreement. The Master Servicer and a Subservicer
may enter into amendments thereto or a different form of Subservicing Agreement,
and the form referred to or included in the Program Guide is merely provided for
information and shall not be deemed to limit in any respect the discretion of
the Master Servicer to modify or enter into different SUBSERVICING AGREEMENTS;
PROVIDED, HOWEVER, that any such amendments or different forms shall be
consistent with and not violate the provisions of either this Agreement or the
Program Guide in a manner which would materially and adversely affect the
interests of the Certificateholders or the Insurer.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee, the Insurer and the
Certificateholders, shall use its best reasonable efforts to enforce the
obligations of each Subservicer under the related Subservicing Agreement and of
each Seller under the related Seller's Agreement, to the extent that the
non-performance of any such obligation would have a material and adverse effect
on a Mortgage Loan, including, without limitation, the obligation to purchase a
Mortgage Loan on account of defective documentation, as described in Section
2.02, or on account of a breach of a representation or warranty, as described in
Section 2.04. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements or Seller's
Agreements, as appropriate, and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent and at such time as the Master
Servicer would employ in its good faith business judgment and which are normal
and usual in its general mortgage servicing activities. The Master Servicer
shall pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement to the extent, if any, that such recovery exceeds all amounts due in
respect of the related Mortgage Loan or (ii) from a specific recovery of costs,
expenses or attorneys fees against the party against whom such enforcement is
directed For purposes of clarification only, the parties agree that the
foregoing is not intended to, and does not, limit the ability of the Master
Servicer to be reimbursed for expenses that are incurred in connection with the
enforcement of a Seller's obligations and are reimbursable pursuant to Section
3.10(a)(vii).
SECTION 3.03. SUCCESSOR SUBSERVICERS.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement AND WITHOUT ANY LIMITATION BY VIRTUE OF THIS AGREEMENT;
PROVIDED, HOWEVER, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Servicer or any Affiliate of
Residential Funding acts as servicer, it will not assume liability for the
representations and warranties of the Subservicer which it replaces. If the
Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such assumption by the successor Subservicer, the Master
Servicer may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations and warranties.
SECTION 3.04. LIABILITY OF THE MASTER SERVICER.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Master Servicer shall remain obligated and liable to the Trustee,
the Insurer and Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
or the Depositor and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. The Master Servicer shall be entitled to enter into any agreement with a
Subservicer or Seller for indemnification of the Master Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. NO CONTRACTUAL RELATIONSHIP BETWEEN SUBSERVICER AND TRUSTEE
OR CERTIFICATEHOLDERS.
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 3.06. The foregoing
provision shall not in any way limit a Subservicer's obligation to cure an
omission or defect or to repurchase a Mortgage Loan as referred to in Section
2.02 hereof.
SECTION 3.06. ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY
TRUSTEE.
(a) In the event the Master Servicer shall for any reason no longer
be the master servicer (including by reason of an Event of Default), the
Trustee, its designee or its successor shall thereupon assume all of the rights
and obligations of the Master Servicer under each Subservicing Agreement that
may have been entered into. The Trustee, its designee or the successor servicer
for the Trustee shall be deemed to have assumed all of the Master Servicer's
interest therein and to have replaced the Master Servicer as a party to the
Subservicing Agreement to the same extent as if the Subservicing Agreement had
been assigned to the assuming party except that the Master Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreement.
(b) The Master Servicer shall, upon request of the Trustee but at
the expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each Subservicing Agreement and the Mortgage Loans then
being serviced and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Subservicing Agreement to the assuming party.
(c) Unless an Insurer Default exists, the Master Servicer will if it
is authorized to do so under the relevant Subservicing Agreement, upon the
request of the Insurer at a time when the Insurer may, under the terms hereof,
remove the Master Servicer, terminate any Subservicing Agreement.
SECTION 3.07. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; DEPOSITS TO
CUSTODIAL ACCOUNT.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Primary Insurance Policy, follow such
collection procedures as it would employ in its good faith business judgment and
which are normal and usual in its general mortgage servicing activities.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive any late payment charge or any prepayment charge or penalty interest in
connection with the prepayment of a Mortgage Loan and (ii) extend the Due Date
for PAYMENTS DUE ON A MORTGAGE LOAN IN ACCORDANCE WITH THE PROGRAM GUIDE,
PROVIDED, HOWEVER, that the Master Servicer shall first determine that any such
waiver or extension will not impair the coverage of any related Primary
Insurance Policy or materially adversely affect the lien of the related
Mortgage. In the event of any such arrangement, the Master Servicer shall make
timely advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements unless otherwise agreed to
by the HOLDERS OF THE CLASSES OF CERTIFICATES AFFECTED THEREBY; PROVIDED,
HOWEVER, that no such extension shall be made if any advance would be a
Nonrecoverable Advance. Consistent with the terms of this Agreement, the Master
Servicer may also waive, modify or vary any term of any Mortgage Loan or consent
to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor if in the Master Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders or the Insurer (taking into account any
estimated REALIZED LOSS THAT MIGHT RESULT ABSENT SUCH ACTION), PROVIDED,
HOWEVER, that the Master Servicer may not modify materially or permit any
Subservicer to modify any Mortgage Loan, including without limitation any
modification that would change the Mortgage Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan or except in connection with prepayments to the extent that such
reamortization is not inconsistent with the terms of the Mortgage Loan), or
extend the final maturity date of such Mortgage Loan, unless such Mortgage Loan
is in default or, in the judgment of the Master Servicer, such default is
reasonably foreseeable. In connection with any Curtailment of a Mortgage Loan,
the Master Servicer, to the extent not inconsistent with the terms of the
Mortgage Note and local law and practice, may permit the Mortgage Loan to be
re-amortized such that the Monthly Payment is recalculated as an amount that
will fully amortize the remaining Stated Principal Amount thereof by the
original Maturity Date based on the original Mortgage Rate; provided, that such
reamortization shall not be permitted if it would constitute a reissuance of the
Mortgage Loan for federal income tax purposes.
(b) The Master Servicer shall establish and maintain a Custodial
Account in which the Master Servicer shall deposit or cause to be deposited on a
daily basis, except as otherwise specifically provided herein, the following
payments and collections remitted by Subservicers or received by it in respect
of the Mortgage Loans subsequent to the Cut-off Date (other than in respect of
principal and interest on each Mortgage Loan due on or before the Due Date in
the month of the Cut-off Date.):
(i) All payments on account of principal, including Principal
Prepayments made by Mortgagors on the Mortgage Loans and the principal
component of any Subservicer Advance or of any REO Proceeds received in
connection with an REO Property for which an REO Disposition has occurred;
(ii) All payments on account of interest at the Adjusted
Mortgage Rate on the Mortgage Loans, including Buydown Funds, if any, and
the interest component of any Subservicer Advance or of any REO Proceeds
received in connection with an REO Property for which an REO Disposition
has occurred;
(iii) Insurance Proceeds and Liquidation Proceeds (net of any
related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased pursuant to
Section 2.02, 2.03, 2.04, 2.06, 3.21 or 4.07 and all amounts required to
be deposited in connection with the substitution of a Qualified Substitute
Mortgage Loan pursuant to Section 2.03 or 2.04; and
(v) Any amounts required to be deposited pursuant to Section
3.07(c) or 3.22.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the Trust
Fund (consisting of payments in respect of principal and interest on each
Mortgage Loan due on or before the Due Date in February) and payments or
collections in the nature of prepayment charges or late payment charges or
assumption fees may but need not be deposited by the Master Servicer in the
Custodial Account. In the event any amount not required to be deposited in the
Custodial Account is so deposited, the Master Servicer may at any time withdraw
such amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Custodial Account may contain funds that belong to one or
more trust funds created for mortgage pass-through certificates of other series
and may contain other funds respecting payments on mortgage loans belonging to
the Master Servicer or serviced or master serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Mortgage Loans.
With respect to Insurance Proceeds, Liquidation Proceeds, REO
Proceeds and the proceeds of the purchase of any Mortgage Loan pursuant to
Sections 2.02, 2.03, 2.04, 2.06, 3.21 and 4.07 received in any calendar month,
the Master Servicer may elect to treat such amounts as included in the related
Available Distribution Amount for the Distribution Date in the month of receipt,
but is not obligated to do so. If the Master Servicer so elects, such amounts
will be deemed to have been received (and any related Realized Loss shall be
deemed to have occurred) on the last day of the month prior to the receipt
thereof.
(c) The Master Servicer shall use its best efforts to cause the
institution maintaining the Custodial Account to invest the funds in the
Custodial Account attributable to the Mortgage Loans in Permitted Investments
which shall mature not later than the Certificate Account Deposit Date next
following the date of such investment (with the exception of the Amount Held for
Future Distribution) and which shall not be sold or disposed of prior to their
maturities. All income and gain realized from any such investment shall be for
the benefit of the Master Servicer as additional servicing compensation and
shall be subject to its withdrawal or order from time to time. The amount of any
losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in the
Custodial Account by the Master Servicer out of its own funds immediately as
realized.
(d) The Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account and the
location of the Certificate Account prior to the use thereof.
SECTION 3.08. SUBSERVICING ACCOUNTS; SERVICING ACCOUNTS
(a) In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to establish and maintain
one or more Subservicing Accounts which shall be an Eligible Account or, if such
account is not an Eligible Account, shall generally satisfy the requirements of
the Program Guide and be otherwise acceptable to the Master Servicer, the
Insurer and each Rating Agency. The Subservicer will be required thereby to
deposit into the Subservicing Account on a daily basis all proceeds of Mortgage
Loans received by the Subservicer, less its Subservicing Fees and unreimbursed
advances and expenses, to the extent permitted by the Subservicing Agreement. If
the Subservicing Account is not an Eligible Account, the Master Servicer shall
be deemed to have received such monies upon receipt thereof by the Subservicer.
The Subservicer shall not be required to deposit in the Subservicing Account
payments or collections in the nature of prepayment charges or late charges or
assumption fees. On or before the date specified in the Program Guide, but in no
event later than the Determination Date, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to remit to the Master
Servicer for deposit in the Custodial Account all funds held in the Subservicing
Account with respect to each Mortgage Loan serviced by such Subservicer that are
required to be remitted to the Master Servicer. The Subservicer will also be
required, pursuant to the Subservicing Agreement, to advance on such scheduled
date of remittance amounts equal to any scheduled monthly installments of
principal and interest less its Subservicing Fees on any Mortgage Loans for
which payment was not received by the Subservicer. This obligation to advance
with respect to each Mortgage Loan will continue up to and including the first
of the month following the date on which the related Mortgaged Property is sold
at a foreclosure sale or is acquired by the Trust Fund by deed in lieu of
foreclosure or otherwise. All such advances received by the Master Servicer
shall be deposited promptly by it in the Custodial Account.
(b) The Subservicer may also be required, pursuant to the
Subservicing Agreement, to remit to the Master Servicer for deposit in the
Custodial Account interest at the Adjusted Mortgage Rate (or Modified Net
Mortgage Rate plus the rate per annum at which the Servicing Fee and the
Certificate Insurer Premium Rate accrues in the case of a Modified Mortgage
loan) on any Curtailment received by such Subservicer in respect of a Mortgage
Loan from the related Mortgagor during any month that is to be applied by the
Subservicer to reduce the unpaid principal balance of the related Mortgage Loan
as of the first day of such month, from the date of application of such
Curtailment to the first day of the following month. Any amounts paid by a
Subservicer pursuant to the preceding sentence shall be for the benefit of the
Master Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time pursuant to Sections 3.10(a)(iv) and (v).
(c) In addition to the Custodial Account and the Certificate
Account, the Master Servicer shall for any Nonsubserviced Mortgage Loan, and
shall cause the Subservicers for Subserviced Mortgage Loans to, establish and
maintain one or more Servicing Accounts and deposit and retain therein all
collections from the Mortgagors (or advances from Subservicers) for the payment
of taxes, assessments, hazard insurance premiums, Primary Insurance Policy
premiums, if applicable, or comparable items for the account of the Mortgagors.
Each Servicing Account shall satisfy the requirements for a Subservicing Account
and, to the extent permitted by the Program Guide or as is otherwise acceptable
to the Master Servicer, may also function as a Subservicing Account. Withdrawals
of amounts related to the Mortgage Loans from the Servicing Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
Primary Insurance Policy premiums, if applicable, or comparable items, to
reimburse the Master Servicer or Subservicer out of related collections for any
payments made pursuant to Sections 3.11 (with respect to the Primary Insurance
Policy) and 3.12(a) (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Account or to clear and
terminate the Servicing Account at the termination of this Agreement in
accordance with Section 9.01 or in accordance with the Program Guide. As part of
its servicing duties, the Master Servicer shall, and the Subservicers will,
pursuant to the Subservicing Agreements, be required to pay to the Mortgagors
interest on funds in this account to the extent required by law.
(d) The Master Servicer shall advance the payments referred to in
the preceding subsection that are not timely paid by the Mortgagors or advanced
by the Subservicers on the date when the tax, premium or other cost for which
such payment is intended is due, but the Master Servicer shall be required so to
advance only to the extent that such advances, in the good faith judgment of the
Master Servicer, will be recoverable by the Master Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.
SECTION 3.09. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
MORTGAGE LOANS.
In the event that compliance with this Section 3.09 shall make any
Class of Certificates legal for investment by federally insured savings and loan
associations, the Master Servicer shall provide, or cause the Subservicers to
provide, to the Trustee, the Office of Thrift Supervision or the FDIC and the
supervisory agents and examiners thereof access to the documentation regarding
the Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by the Master
Servicer. The Master Servicer shall permit such representatives to photocopy any
such documentation and shall provide equipment for that purpose at a charge
reasonably approximating the cost of such photocopying to the Master Servicer.
SECTION 3.10. PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.
(a) The Master Servicer may, from time to time as provided herein,
make withdrawals from the Custodial Account of amounts on deposit therein
pursuant to Section 3.07 that are attributable to the Mortgage Loans for the
following purposes:
(i) to make deposits into the Certificate Account in the
amounts and in the manner provided for in Section 4.01;
(ii) to reimburse itself or the related Subservicer for
previously unreimbursed advances or expenses made pursuant to Sections
3.01, 3.08, 3.12(a), 3.14 and 4.04 or otherwise reimbursable pursuant to
the terms of this Agreement, such withdrawal right being limited to
amounts received on particular Mortgage Loans (including, for this
purpose, REO Proceeds, Insurance Proceeds, Liquidation Proceeds and
proceeds from the purchase of a Mortgage Loan pursuant to Section 2.02,
2.03, 2.04, 2.06, 3.21 or 4.07) which represent (A) Late Collections of
Monthly Payments for which any such advance was made in the case of
Subservicer Advances or Advances pursuant to Section 4.04 and (B) late
recoveries of the payments for which such advances were made in the case
of Servicing Advances;
(iii) to pay to itself or the related Subservicer (if not
previously retained by such Subservicer) out of each payment received by
the Master Servicer on account of interest on a Mortgage Loan as
contemplated by Sections 3.14 and 3.16, an amount equal to that remaining
portion of any such payment as to interest (but not in excess of the
Servicing Fee and the Subservicing Fee, if not previously retained) which,
when deducted, will result in the remaining amount of such interest being
interest at a rate per annum equal to the sum of the Net Mortgage Rate (or
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan) plus
the Certificate Insurer Premium Rate on the amount specified in the
amortization schedule of the related Mortgage Loan as the principal
balance thereof at the beginning of the period respecting which such
interest was paid after giving effect to any previous Curtailments;
(iv) to pay to itself as additional servicing compensation any
interest or investment income earned on funds deposited in the Custodial
Account that it is entitled to withdraw pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing compensation any
Foreclosure Profits, and any amounts remitted by Subservicers as interest
in respect of Curtailments pursuant to Section 3.08(b);
(vi) to pay to itself, a Subservicer, a Seller, Residential
Funding, the Depositor or any other appropriate Person, as the case may
be, with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased or otherwise transferred pursuant to
Section 2.02, 2.03, 2.04, 2.06, 3.21, 4.07 or 9.01, all amounts received
thereon and not required to be distributed to Certificateholders as of the
date on which the related Stated Principal Balance or Purchase Price is
determined;
(vii) to reimburse itself or the related Subservicer for any
Nonrecoverable Advance or Advances in the manner and to the extent
provided in subsection (c) below;
(vii) to reimburse itself or the Depositor for expenses
incurred by and reimbursable to it or the Depositor pursuant to Section
3.14(c), 6.03, 10.01 or otherwise, or in connection with enforcing any
repurchase, substitution or indemnification obligation of any Seller
(other than an Affiliate of the Depositor) pursuant to the related
Seller's Agreement;
(viii) to reimburse itself for amounts expended by it (a)
pursuant to Section 3.14 in good faith in connection with the restoration
of property damaged by an Uninsured Cause, and (b) in connection with the
liquidation of a Mortgage Loan or disposition of an REO Property to the
extent not otherwise reimbursed pursuant to clause (ii) or (viii) above;
and
(ix) to withdraw any amount deposited in the Custodial Account
that was not required to be deposited therein pursuant to Section 3.07,
including any payoff fees or penalties or any other additional amounts
payable to the Master Servicer or Subservicer pursuant to the terms of the
Mortgage Note.
(b) Since, in connection with withdrawals pursuant to clauses (ii),
(iii), (v) and (vi), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Mortgage Loan, the Master
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account pursuant to such clauses.
(c) The Master Servicer shall be entitled to reimburse itself or the
related Subservicer for any advance made in respect of a Mortgage Loan that the
Master Servicer determines to be a Nonrecoverable Advance by withdrawal from the
Custodial Account of amounts on deposit therein attributable to the Mortgage
Loans on any Certificate Account Deposit Date succeeding the date of such
determination. Such right of reimbursement in respect of a Nonrecoverable
Advance on any such Certificate Account Deposit Date shall be limited to an
amount not exceeding the portion of such advance previously paid to
Certificateholders (and not theretofore reimbursed to the Master Servicer or the
related Subservicer).
SECTION 3.11. MAINTENANCE OF PRIMARY INSURANCE COVERAGE.
(a) The Master Servicer shall not take, or permit any Subservicer to
take, any action which would result in noncoverage under any applicable Primary
Insurance Policy of any loss which, but for the actions of the Master Servicer
or Subservicer, would have been covered thereunder. To the extent coverage is
available, the Master Servicer shall keep or cause to be kept in full force and
effect each such Primary Insurance Policy until the principal balance of the
related Mortgage Loan secured by a Mortgaged Property is reduced to 80% or less
of the Appraised Value in the case of such a Mortgage Loan having a
Loan-to-Value Ratio (or, in the case of a Junior Mortgage Loan, the Combined
Loan-to-Value Ratio) at origination in excess of 80%, provided that such Primary
Insurance Policy was in place as of the Cut-off Date and the Depositor had
knowledge of such Primary Insurance Policy. The Master Servicer shall not cancel
or refuse to renew any such Primary Insurance Policy applicable to a
Nonsubserviced Mortgage Loan, or consent to any Subservicer canceling or
refusing to renew any such Primary Insurance Policy applicable to a Mortgage
Loan subserviced by it, that is in effect at the date of the initial issuance of
the Certificates and is required to be kept in force hereunder unless the
replacement Primary Insurance Policy for such canceled or non-renewed policy is
maintained with an insurer whose claims-paying ability is acceptable to each
Rating Agency for mortgage pass-through certificates having a rating equal to or
better than the lower of the then-current rating or the rating assigned to the
Certificates as of the Closing Date by such Rating Agency.
(b) In connection with its activities as administrator and servicer
of the Mortgage Loans, the Master Servicer agrees to present or to cause the
related Subservicer to present, on behalf of the Master Servicer, the
Subservicer, if any, the Trustee and Certificateholders, claims to the insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies, and, in this regard, to take or cause to be taken such reasonable
action as shall be necessary to permit recovery under any Primary Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.07, any
Insurance Proceeds collected by or remitted to the Master Servicer under any
Primary Insurance Policies shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 3.10.
SECTION 3.12. MAINTENANCE OF FIRE INSURANCE AND OMISSIONS AND FIDELITY
COVERAGE.
(a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage in an amount which is equal
to the lesser of the principal balance owing on such Mortgage Loan (together
with the principal balance of any mortgage loan secured by a lien that is senior
to the Mortgage Loan) or 100 percent of the INSURABLE VALUE OF THE IMPROVEMENTS;
PROVIDED, HOWEVER, that such coverage may not be less than the minimum amount
required to fully compensate for any loss or damage on a replacement cost basis.
To the extent it may do so without breaching the related Subservicing Agreement,
the Master Servicer shall replace any Subservicer that does not cause such
insurance, to the extent it is available, to be maintained. The Master Servicer
shall also cause to be maintained on property acquired upon foreclosure, or deed
in lieu of foreclosure, of any Mortgage Loan, fire insurance with extended
coverage in an amount which is at least equal to the amount necessary to avoid
the application of any co-insurance clause contained in the related hazard
insurance policy. Pursuant to Section 3.07, any amounts collected by the Master
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.10. Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the purpose
of calculating monthly distributions to Certificateholders, be added to the
amount owing under the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer
out of related late payments by the Mortgagor or out of Insurance Proceeds and
Liquidation Proceeds to the extent permitted by Section 3.10. It is understood
and agreed that no earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired in respect of a Mortgage Loan
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. When the
improvements securing a Mortgage Loan are located at the time of origination of
such Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer shall cause flood insurance (to the extent available) to be
maintained in respect thereof. Such flood insurance shall be in an amount equal
to the lesser of (i) the amount required to compensate for any loss or damage to
the Mortgaged Property on a replacement cost basis and (ii) the maximum amount
of such insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first sentence of this Section
3.12(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.12(a) and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Master Servicer shall
be made on the Certificate Account Deposit Date next preceding the Distribution
Date which occurs in the month following the month in which payments under any
such policy would have been deposited in the Custodial Account. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Master Servicer agrees to present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy.
(b) The Master Servicer shall obtain and maintain at its own expense
and keep in full force and effect throughout the term of this Agreement a
blanket fidelity bond and an errors and omissions insurance policy covering the
Master Servicer's officers and employees and other persons acting on behalf of
the Master Servicer in connection with its activities under this Agreement. The
amount of coverage shall be at least equal to the coverage that would be
required by FNMA or FHLMC, whichever is greater, with respect to the Master
Servicer if the Master Servicer were servicing and administering the Mortgage
Loans for FNMA or FHLMC. In the event that any such bond or policy ceases to be
in effect, the Master Servicer shall obtain a comparable replacement bond or
policy from an issuer or insurer, as the case may be, meeting the requirements,
if any, of the Program Guide and acceptable to the Depositor. Coverage of the
Master Servicer under a policy or bond obtained by an Affiliate of the Master
Servicer and providing the coverage required by this Section 3.12(b) shall
satisfy the requirements of this Section 3.12(b).
SECTION 3.13. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AND
MODIFICATION AGREEMENTS; CERTAIN ASSIGNMENTS.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the
Master Servicer or Subservicer, to the extent it has knowledge of such
conveyance, shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing:
(i) the Master Servicer shall not be deemed to be in default
under this Section 3.13(a) by reason of any transfer or assumption which
the Master Servicer is restricted by law from preventing; and
(ii) if the Master Servicer determines that it is reasonably
likely that any Mortgagor will bring, or if any Mortgagor does bring,
legal action to declare invalid or otherwise avoid enforcement of a
due-on-sale clause contained in any Mortgage Note or Mortgage, the Master
Servicer shall not be required to enforce the due-on-sale clause or to
contest such action.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.13(a), in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption or modification agreement or supplement to the
Mortgage Note or Mortgage which requires the signature of the Trustee, or if an
instrument of release signed by the Trustee is required releasing the Mortgagor
from liability on the Mortgage Loan, the Master Servicer is authorized, subject
to the requirements of the sentence next following, to execute and deliver, on
behalf of the Trustee, the assumption agreement with the Person to whom the
Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any applicable laws REGARDING ASSUMPTIONS OR THE
TRANSFER OF THE MORTGAGED PROPERTY TO SUCH PERSON; PROVIDED, HOWEVER, none of
such terms and requirements shall both constitute a "significant modification"
effecting an exchange or reissuance of such Mortgage Loan under the Code (or
final, temporary or proposed Treasury regulations promulgated thereunder) and
cause any REMIC formed hereunder to fail to qualify as a REMIC under the Code or
(subject to Section 10.01(f)) result in the imposition of any tax on "prohibited
transactions" or constitute "contributions" after the startup date under the
REMIC Provisions. The Master Servicer shall execute and deliver such documents
only if it reasonably determines that (i) its execution and delivery thereof
will not conflict with or violate any terms of this Agreement or cause the
unpaid balance and interest on the Mortgage Loan to be uncollectible in whole or
in part, (ii) any required consents of insurers under any Required Insurance
Policies have been obtained and (iii) subsequent to the closing of the
transaction involving the assumption or transfer (A) the Mortgage Loan will
continue to be secured by a first mortgage lien (or junior lien of the same
priority in relation to any senior mortgage loan, with respect to any Mortgage
Loan secured by a junior Mortgage) pursuant to the terms of the Mortgage, (B)
such transaction will not adversely affect the coverage under any Required
Insurance Policies, (C) the Mortgage Loan will fully amortize over the remaining
term thereof, (D) no material term of the Mortgage Loan (including the interest
rate on the Mortgage Loan) will be altered nor will the term of the Mortgage
Loan be changed and (E) if the seller/transferor of the Mortgaged Property is to
be released from liability on the Mortgage Loan, the buyer/transferee of the
Mortgaged Property would be qualified to assume the Mortgage Loan based on
generally comparable credit quality and such release will not (based on the
Master Servicer's or Subservicer's good faith determination) adversely affect
the collectability of the Mortgage Loan. Upon receipt of appropriate
instructions from the Master Servicer in accordance with the foregoing, the
Trustee shall execute any necessary instruments for such assumption or
substitution of liability as directed by the Master Servicer. Upon the closing
of the transactions contemplated by such documents, the Master Servicer shall
cause the originals or true and correct copies of the assumption agreement, the
release (if any), or the modification or supplement to the Mortgage Note or
Mortgage to be delivered to the Trustee or the Custodian and deposited with the
Mortgage File for such Mortgage Loan. Any fee collected by the Master Servicer
or such related Subservicer for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer or such Subservicer
as additional servicing compensation.
(c) The Master Servicer or the related Subservicer, as the case may
be, shall be entitled to approve a request from a Mortgagor for a partial
release of the related Mortgaged Property, the granting of an easement thereon
in favor of another Person, any alteration or demolition of the related
Mortgaged Property or other similar matters if it has determined, exercising its
good faith business judgment in the same manner as it would if it were the owner
of the related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby
and that no REMIC formed hereunder would fail to continue to qualify as a REMIC
under the Code as a result thereof and (subject to Section 10.01(f)) that no tax
on "prohibited transactions" or "contributions" after the startup day would be
imposed on the REMIC as a result thereof. With respect to any Junior Mortgage
Loan, a partial release pursuant to this Section 3.13 shall be permitted only if
the Combined Loan-to-Value Ratio for such Mortgage Loan after such partial
release does not exceed the Combined Loan-to-Value Ratio for such Mortgage Loan
as of the Cut-off Date. Any fee collected by the Master Servicer or the related
Subservicer for processing such a request will be retained by the Master
Servicer or such Subservicer as additional servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee and Master Servicer shall be entitled to approve an
assignment in lieu of satisfaction with respect to any Mortgage Loan, provided
the obligee with respect to such Mortgage Loan following such proposed
assignment provides the Trustee and Master Servicer with a "Lender Certification
for Assignment of Mortgage Loan" in the form attached hereto as Exhibit K, in
form and substance satisfactory to the Trustee and Master Servicer, providing
the following: (i) that the Mortgage Loan is secured by Mortgaged Property
located in a jurisdiction in which an assignment in lieu of satisfaction is
required to preserve lien priority, minimize or avoid mortgage recording taxes
or otherwise comply with, or facilitate a refinancing under, the laws of such
jurisdiction; (ii) that the substance of the assignment is, and is intended to
be, a refinancing of such Mortgage Loan and that the form of the transaction is
solely to comply with, or facilitate the transaction under, such local laws;
(iii) that the Mortgage Loan following the proposed assignment will have a rate
of interest more than the greater of (a) 1/4% and (b) 5% of the annual yield of
the unmodified Mortgage Loan, below or above the rate of interest on such
Mortgage Loan prior to such proposed assignment; and (iv) that such assignment
is at the request of the borrower under the related Mortgage Loan. Upon approval
of an assignment in lieu of satisfaction with respect to any Mortgage Loan, the
Master Servicer shall receive cash in an amount equal to the unpaid principal
balance of and accrued interest on such Mortgage Loan and the Master Servicer
shall treat such amount as a Principal Prepayment in Full with respect to such
Mortgage Loan for all purposes hereof.
SECTION 3.14. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Master Servicer shall foreclose upon or otherwise comparably
convert (which may include an REO Acquisition) the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.07. In connection with such foreclosure or other
conversion, the Master Servicer shall, consistent with Section 3.11, follow such
practices and procedures (including, in the case of any default on a related
senior mortgage loan, the advancing of funds to correct such default if deemed
to be appropriate by the Master Servicer) as it shall deem necessary or
advisable, as shall be normal and usual in its general mortgage servicing
activities and as shall be required or permitted by the Program Guide; provided
that the Master Servicer shall not be liable in any respect hereunder if the
Master Servicer is acting in connection with any such foreclosure or other
conversion in a manner that is consistent with the provisions of this Agreement.
The Master Servicer, however, shall not be required to expend its own funds or
incur other reimbursable charges in connection with any foreclosure, or
attempted foreclosure which is not completed, or towards the correction of any
default on a related senior mortgage loan, or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan to Holders of
Certificates of one or more Classes or the Insurer after reimbursement to itself
for such expenses or charges and (ii) that such expenses and charges will be
recoverable to it through Liquidation Proceeds, Insurance Proceeds, or REO
Proceeds (respecting which it shall have priority for purposes of withdrawals
from the Custodial Account pursuant to Section 3.10, whether or not such
expenses and charges are actually recoverable from related Liquidation Proceeds,
Insurance Proceeds or REO Proceeds). In the event of such a determination by the
Master Servicer pursuant to this Section 3.14(a), the Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.10.
Concurrently with the foregoing, the Master Servicer may pursue any remedies
that may be available in connection with a breach of a representation and
warranty with respect to any such Mortgage Loan in accordance with Sections 2.03
and 2.04. However, the Master Servicer is not required to continue to pursue
both foreclosure (or similar remedies) with respect to the Mortgage Loans and
remedies in connection with a breach of a representation and warranty if the
Master Servicer determines in its reasonable discretion that one such remedy is
more likely to result in a greater recovery as to the Mortgage Loan. Upon the
occurrence of a Cash Liquidation or REO Disposition, following the deposit in
the Custodial Account of all Insurance Proceeds, Liquidation Proceeds and other
payments and recoveries referred to in the definition of "Cash Liquidation" or
"REO Disposition," as applicable, upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer, the Trustee or any
Custodian, as the case may be, shall release to the Master Servicer the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Master Servicer or its designee,
as the case may be, the related Mortgage Loan, and thereafter such Mortgage Loan
shall not be part of the Trust Fund. Notwithstanding the foregoing or any other
provision of this Agreement, in the Master Servicer's sole discretion with
respect to any defaulted Mortgage Loan or REO Property as to either of the
following provisions, (i) a Cash Liquidation or REO Disposition may be deemed to
have occurred if substantially all amounts expected by the Master Servicer to be
received in connection with the related defaulted Mortgage Loan or REO Property
have been received, and (ii) for purposes of determining the amount of any
Liquidation Proceeds, Insurance Proceeds, REO Proceeds or other unscheduled
collections or the amount of any Realized Loss, the Master Servicer may take
into account minimal amounts of additional receipts expected to be received or
any estimated additional liquidation expenses expected to be incurred in
connection with the related defaulted Mortgage Loan or REO Property.
(b) In the event that title to any Mortgaged Property is acquired by
the Trust Fund as an REO Property by foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale shall be issued to the Trustee or
to its nominee on behalf of Certificateholders. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such REO
Property shall (except as otherwise expressly provided herein) be considered to
be an Outstanding Mortgage Loan held in the Trust Fund until such time as the
REO Property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder so long as such REO Property shall be considered to be an
Outstanding Mortgage Loan it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been discharged,
such Mortgage Note and the related amortization schedule in effect at the time
of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period) remain
in effect.
(c) In the event that any REMIC formed hereunder acquires any REO
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Master Servicer, on behalf of such REMIC, shall
dispose of such REO Property within three full years after the taxable year of
its acquisition by such REMIC for purposes of Section 860G(a)(8) of the Code (or
such shorter period as may be necessary under applicable state law (including
any state in which such property is located) to maintain the status of each
REMIC formed hereunder as a REMIC under applicable state law and avoid taxes
resulting from such property failing to be foreclosure property under applicable
state law) or, at the expense of the applicable REMIC, request, more than 60
days before the day on which such grace period would otherwise expire, an
extension of such grace period unless the Master Servicer (subject to Section
10.01(f)) obtains for the Trustee an Opinion of Counsel, addressed to the
Trustee and the Master Servicer, to the effect that the holding by the
applicable REMIC of such REO Property subsequent to such period will not result
in the imposition of taxes on "prohibited transactions" as defined in Section
860F of the Code, or cause any REMIC formed hereunder to fail to qualify as a
REMIC under the Code at any time that any Certificates of such REMIC are
outstanding, in which case such REMIC may continue to hold such REO Property
(subject to any conditions contained in such Opinion of Counsel). The Master
Servicer shall be entitled to be reimbursed from the Custodial Account for any
costs incurred in obtaining such Opinion of Counsel, as provided in Section
3.10. Notwithstanding any other provision of this Agreement, no REO Property
acquired by any REMIC formed hereunder shall be rented (or allowed to continue
to be rented) or otherwise used by or on behalf of such REMIC in such
circumstances or manner or pursuant to any terms that would (i) cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or (ii) subject such REMIC to the imposition of
any federal income taxes on the income earned from such REO Property, including
any taxes imposed by reason of Section 860G(c) of the Code, unless the Master
Servicer has agreed to indemnify and hold harmless each REMIC formed hereunder
with respect to the imposition of any such taxes.
(d) The proceeds of any Cash Liquidation, REO Disposition or
purchase or repurchase of any Mortgage Loan pursuant to the terms of this
Agreement, as well as any recovery resulting from a collection of Liquidation
Proceeds, Insurance Proceeds or REO Proceeds, will be applied in the following
order of priority: first, to reimburse the Master Servicer or the related
Subservicer in accordance with Section 3.10(a)(ii); second, to the
Certificateholders to the extent of accrued and unpaid interest on the Mortgage
Loan, and any related REO Imputed Interest, at the Net Mortgage Rate (or the
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), to the Due
Date in the related Due Period prior to the Distribution Date on which such
amounts are to be distributed; third, to the Certificateholders as a recovery of
principal on the Mortgage Loan (or REO Property); fourth, to all Servicing Fees
and Subservicing Fees payable therefrom (and the Master Servicer and the
Subservicer shall have no claims for any deficiencies with respect to such fees
which result from the foregoing allocation); fifth, to the Insurer for
reimbursement for any payments made pursuant to the related Policy to the extent
not reimbursed pursuant to Section 4.02(b); and sixth, to Foreclosure Profits.
(e) In the event of a default on a Mortgage Loan one or more of
whose obligors is not a United States Person, in connection with any foreclosure
or acquisition of a deed in lieu of foreclosure (together, "foreclosure") in
respect of such Mortgage Loan, the Master Servicer will cause compliance with
the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any successor
thereto) necessary to assure that no withholding tax obligation arises with
respect to the proceeds of such foreclosure except to the extent, if any, that
proceeds of such foreclosure are required to be remitted to the obligors on such
Mortgage Loan.
SECTION 3.15. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any Mortgage Loan,
or upon the receipt by the Master Servicer of a notification that payment in
full will be escrowed in a manner customary for such purposes, the Master
Servicer will immediately notify the Trustee (if it holds the related Mortgage
File) or the Custodian by a certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Custodial Account pursuant to Section 3.07 have been or will be
so deposited), substantially in one of the forms attached hereto as Exhibit E,
or, in the case of the Custodian, an electronic request in a form acceptable to
the Custodian, requesting delivery to it of the Mortgage File. Upon receipt of
such certification and request, the Trustee shall promptly release, or cause the
Custodian to release, the related Mortgage File to the Master Servicer. The
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation thereon
and to cause the removal from the registration on the MERS(R) System of such
Mortgage and to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation or of partial or full release. No expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the Custodial Account or the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Master Servicer shall deliver to the
Custodian, with a copy to the Trustee, a certificate of a Servicing Officer
substantially in one of the forms attached as Exhibit E hereto, or, in the case
of the Custodian, an electronic request in a form acceptable to the Custodian,
requesting that possession of all, or any document constituting part of, the
Mortgage File be released to the Master Servicer and certifying as to the reason
for such release and that such release will not invalidate any insurance
coverage provided in respect of the Mortgage Loan under any Required Insurance
Policy. Upon receipt of the foregoing, the Trustee shall deliver, or cause the
Custodian to deliver, the Mortgage File or any document therein to the Master
Servicer. The Master Servicer shall cause each Mortgage File or any document
therein so released to be returned to the Trustee, or the Custodian as agent for
the Trustee when the need therefor by the Master Servicer no longer exists,
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Custodial Account or
(ii) the Mortgage File or such document has been delivered directly or through a
Subservicer to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master Servicer has delivered directly or through a
Subservicer to the Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. In the event of the
liquidation of a Mortgage Loan, the Trustee shall deliver the Request for
Release with respect thereto to the Master Servicer upon deposit of the related
Liquidation Proceeds in the Custodial Account.
(c) The Trustee or the Master Servicer on the Trustee's behalf shall
execute and deliver to the Master Servicer, if necessary, any court pleadings,
requests for trustee's sale or other documents necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Together with such documents or pleadings (if signed by the Trustee),
the Master Servicer shall deliver to the Trustee a certificate of a Servicing
Officer requesting that such pleadings or documents be executed by the Trustee
and certifying as to the reason such documents or pleadings are required and
that the execution and delivery thereof by the Trustee will not invalidate any
insurance coverage under any Required Insurance Policy or invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
SECTION 3.16. SERVICING AND OTHER COMPENSATION; COMPENSATING INTEREST.
(a) The Master Servicer, as compensation for its activities
hereunder, shall be entitled to receive on each Distribution Date the amounts
provided for by clauses (iii), (iv), (v) and (vi) of Section 3.10(a). The amount
of servicing compensation provided for in such clauses shall be accounted for on
a Mortgage Loan-by-Mortgage Loan basis. In the event that Liquidation Proceeds,
Insurance Proceeds and REO Proceeds (net of amounts reimbursable therefrom
pursuant to Section 3.10(a)(ii)) in respect of a Cash Liquidation or REO
Disposition exceed the unpaid principal balance of such Mortgage Loan plus
unpaid interest accrued thereon (including REO Imputed Interest) at a per annum
rate equal to the related Net Mortgage Rate (or the Modified Net Mortgage Rate
in the case of a Modified Mortgage Loan), the Master Servicer shall be entitled
to retain therefrom and to pay to itself and/or the related Subservicer, any
Foreclosure Profits and any Servicing Fee or Subservicing Fee considered to be
accrued but unpaid.
(b) Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges, investment income on amounts in
the Custodial Account or the Certificate Account or otherwise shall be retained
by the Master Servicer or the Subservicer to the extent provided herein, subject
to clause (e) below.
(c) The Master Servicer shall be required to pay, or cause to be
paid, all expenses incurred by it in connection with its servicing activities
hereunder (including payment of premiums for the Primary Insurance Policies, if
any, to the extent such premiums are not required to be paid by the related
Mortgagors, and the fees and expenses of the Trustee and any Custodian) and
shall not be entitled to reimbursement therefor except as specifically provided
in Sections 3.10 and 3.14.
(d) The Master Servicer's right to receive servicing compensation
may not be transferred in whole or in part except in connection with the
transfer of all of its responsibilities and obligations of the Master Servicer
under this Agreement.
(e) Notwithstanding clauses (a) and (b) above, the amount of
servicing compensation that the Master Servicer shall be entitled to receive for
its activities hereunder for the period ending on each Distribution Date shall
be reduced (but not below zero) by an amount equal to Compensating Interest (if
any) for such Distribution Date. Such reduction shall be applied during such
period as follows: first, to any Servicing Fee or Subservicing Fee to which the
Master Servicer is entitled pursuant to Section 3.10(a)(iii); second, to any
income or gain realized from any investment of funds held in the Custodial
Account or the Certificate Account to which the Master Servicer is entitled
pursuant to Sections 3.07(c) or 4.01(b), respectively; and third, to any amounts
of servicing compensation to which the Master Servicer is entitled pursuant to
Section 3.10(a)(v) or (vi). In making such reduction, the Master Servicer will
not withdraw from the Custodial Account any such amount representing all or a
portion of the Servicing Fee to which it is entitled pursuant to Section
3.10(a)(iii); (ii) will not withdraw from the Custodial Account or Certificate
Account any such amount to which it is entitled pursuant to Section 3.07(c) or
4.01(b) and (iii) will not withdraw from the Custodial Account any such amount
of servicing compensation to which it is entitled pursuant to Section 3.10(a)(v)
or (vi). Compensating Interest shall be allocated on any Distribution Date to
each Loan Group pro rata based upon the Prepayment Interest Shortfalls for each
such Loan Group for such Distribution Date. With respect to any Distribution
Date, Compensating Interest derived from Loan Group I shall be used on such
Distribution Date (i) to cover any Prepayment Interest Shortfalls on the Group I
Loans and (ii) to cover any Prepayment Interest Shortfalls on the Group II
Loans, but only to the extent not covered by Compensating Interest derived from
Loan Group II. With respect to any Distribution Date, Compensating Interest
derived from Loan Group II shall be used on such Distribution Date (i) to cover
any Prepayment Interest Shortfalls on the Group II Loans and (ii) to cover any
Prepayment Interest Shortfalls on the Group I Loans, but only to the extent not
covered by Compensating Interest derived from Loan Group I.
SECTION 3.17. REPORTS TO THE TRUSTEE AND THE DEPOSITOR.
Not later than fifteen days after each Distribution Date, the Master
Servicer shall forward to the Trustee and the Depositor a statement, certified
by a Servicing Officer, setting forth the status of the Custodial Account as of
the close of business on such Distribution Date as it relates to the Mortgage
Loans and showing, for the period covered by such statement, the aggregate of
deposits in or withdrawals from the Custodial Account in respect of the Mortgage
Loans for each category of deposit specified in Section 3.07 and each category
of withdrawal specified in Section 3.10.
SECTION 3.18. ANNUAL STATEMENT AS TO COMPLIANCE.
The Master Servicer will deliver to the Depositor, the Trustee and
the Insurer on or before March 31 of each year, beginning with the first March
31 that occurs at least six months after the Cut-off Date, an Officers'
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year related to
its servicing of mortgage loans and of its performance under the pooling and
servicing agreements, including this Agreement, has been made under such
officers' supervision, (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer has complied in all material respects with the
minimum servicing standards set forth in the Uniform Single Attestation Program
for Mortgage Bankers and has fulfilled all of its material obligations in all
material respects throughout such year, or, if there has been material
noncompliance with such servicing standards or a default in the fulfillment in
all material respects of any such obligation relating to this Agreement, such
statement shall include a description of such noncompliance or specify each such
default, as the case may be, known to such officer and the nature and status
thereof and that no Trigger Event has occurred, or if a Trigger Event has
occurred, specifying the nature thereof, which statement with respect to a
Trigger Event may be delivered as a separate Officers' Certificate and (iii) to
the best of such officers' knowledge, each Subservicer has complied in all
material respects with the minimum servicing standards set forth in the Uniform
Single Attestation Program for Mortgage Bankers and has fulfilled all of its
material obligations under its Subservicing Agreement in all material respects
throughout such year, or if there has been material noncompliance with such
servicing standards or a material default in the fulfillment of such obligations
relating to this Agreement, specifying such statement shall include a
description of such noncompliance or specify each such default, as the case may
be, known to such officer and the nature and status thereof.
SECTION 3.19. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before March 31 of each year, beginning with the first March
31 that occurs at least six months after the Cut-off Date, the Master Servicer
at its expense shall cause a firm of independent public accountants which is any
one of the six major nationally recognized firms of independent public
accountants or a firm reasonably acceptable to the Insurer and which is also a
member of the American Institute of Certified Public Accountants to furnish a
report to the Depositor, the Trustee and the Insurer stating its opinion that,
on the basis of an examination conducted by such firm substantially in
accordance with standards established by the American Institute of Certified
Public Accountants, the assertions made pursuant to Section 3.18 regarding
compliance with the minimum servicing standards set forth in the Uniform Single
Attestation Program for Mortgage Bankers during the preceding calendar year are
fairly stated in all material respects, subject to such exceptions and other
qualifications that, in the opinion of such firm, such accounting standards
require it to report. In rendering such statement, such firm may rely, as to
matters relating to the direct servicing of mortgage loans by Subservicers, upon
comparable statements for examinations conducted by independent public
accountants substantially in accordance with standards established by the
American Institute of Certified Public Accountants (rendered within one year of
such statement) with respect to such Subservicers.
SECTION 3.20. RIGHT OF THE DEPOSITOR IN RESPECT OF THE MASTER SERVICER.
The Master Servicer shall afford the Depositor, upon reasonable
notice, during normal business hours access to all records maintained by the
Master Servicer in respect of its rights and obligations hereunder and access to
officers of the Master Servicer responsible for such obligations. Upon request,
the Master Servicer shall furnish the Depositor with its most recent financial
statements and such other information as the Master Servicer possesses regarding
its business, affairs, property and condition, financial or otherwise. The
Master Servicer shall also cooperate with all reasonable requests for
information including, but not limited to, notices, tapes and copies of files,
regarding itself, the Mortgage Loans or the Certificates from any Person or
Persons identified by the Depositor or Residential Funding. The Insurer hereby
is so identified. The Depositor may, but is not obligated to perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer hereunder
or exercise the rights of the Master Servicer hereunder; provided that the
Master Servicer shall not be relieved of any of its obligations hereunder by
virtue of such performance by the Depositor or its designee. The Depositor shall
not have the responsibility or liability for any action or failure to act by the
Master Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.
SECTION 3.21. [RESERVED]
SECTION 3.22. ADMINISTRATION OF BUYDOWN FUNDS.
(a) With respect to any Buydown Mortgage Loan, the Subservicer has
deposited Buydown Funds in an account that satisfies the requirements for a
Subservicing Account (the "Buydown Account"). The Master Servicer shall cause
the Subservicing Agreement to require that upon receipt from the Mortgagor of
the amount due on a Due Date for each Buydown Mortgage Loan, the Subservicer
will withdraw from the Buydown Account the predetermined amount that, when added
to the amount due on such date from the Mortgagor, equals the full Monthly
Payment and transmit that amount in accordance with the terms of the
Subservicing Agreement to the Master Servicer together with the related payment
made by the Mortgagor or advanced by the Subservicer.
(b) If the Mortgagor on a Buydown Mortgage Loan prepays such loan in
its entirety during the period (the "Buydown Period") when Buydown Funds are
required to be applied to such Buydown Mortgage Loan, the Subservicer shall be
required to withdraw from the Buydown Account and remit any Buydown Funds
remaining in the Buydown Account in accordance with the related buydown
agreement. The amount of Buydown Funds which may be remitted in accordance with
the related buydown agreement may reduce the amount required to be paid by the
Mortgagor to fully prepay the related Mortgage Loan. If the Mortgagor on a
Buydown Mortgage Loan defaults on such Mortgage Loan during the Buydown Period
and the property securing such Buydown Mortgage Loan is sold in the liquidation
thereof (either by the Master Servicer or the insurer under any related Primary
Insurance Policy), the Subservicer shall be required to withdraw from the
Buydown Account the Buydown Funds for such Buydown Mortgage Loan still held in
the Buydown Account and remit the same to the Master Servicer in accordance with
the terms of the Subservicing Agreement and the Master Servicer shall deposit
such Buydown Funds in the Custodial Account or, if instructed by the Master
Servicer, pay to the insurer under any related Primary Insurance Policy if the
Mortgaged Property is transferred to such insurer and such insurer pays all of
the loss (including expenses) incurred in respect of such default. Any amount so
remitted pursuant to the preceding sentence will be deemed to reduce the amount
owed on the Mortgage Loan.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. CERTIFICATE ACCOUNT.
(a) The Master Servicer acting as agent of the Trustee shall
establish and maintain a Certificate Account in which the Master Servicer shall
cause to be deposited on behalf of the Trustee on or before 2:00 P.M. New York
time on each Certificate Account Deposit Date by wire transfer of immediately
available funds an amount equal to the sum of (i) any Advance for the
immediately succeeding Distribution Date, (ii) any amount required to be
deposited in the Certificate Account pursuant to Section 3.12(a), (iii) any
amount that the Master Servicer is not permitted to withdraw from the
Certificate Account pursuant to Section 3.16(e), (iv) any amount required to be
deposited in the Certificate Account pursuant to Section 4.07, (v) any amount
required to be deposited in the Certificate Account pursuant to Section 9.01,
(vi) an amount equal to the Certificate Insurer Premium payable on such
Distribution Date and (vii) all other amounts constituting the Available
Distribution Amount for each Loan Group for the immediately succeeding
Distribution Date.
In addition, as and to the extent required pursuant to Section
4.08(b) the Trustee shall withdraw from the Insurance Account and deposit into
the Certificate Account the amount necessary to pay the Insured Amount on each
Distribution Date to the extent received from the Insurer.
(b) On each Distribution Date, prior to making any other
distributions referred to in Section 4.02 herein, the Trustee shall withdraw
from the Certificate Account and pay to the Insurer, by wire transfer of
immediately available funds to the Insurer Account, the Certificate Insurer
Premium for such Distribution Date. The wiring instructions of the Insurer are
attached hereto as Exhibit O.
(c) The Trustee shall, upon written request from the Master
Servicer, invest or cause the institution maintaining the Certificate Account to
invest the funds in the Certificate Account in Permitted Investments designated
in the name of the Trustee for the benefit of the Insurer and the
Certificateholders, which shall mature not later than the Business Day next
preceding the Distribution Date next following the date of such investment
(except that (i) any investment in the institution with which the Certificate
Account is maintained may mature on such Distribution Date and (ii) any other
investment may mature on such Distribution Date if the Trustee shall advance
funds on such Distribution Date to the Certificate Account in the amount payable
on such investment on such Distribution Date, pending receipt thereof to the
extent necessary to make distributions on the Certificates) and shall not be
sold or disposed of prior to maturity. All income and gain realized from any
such investment shall be for the benefit of the Master Servicer and shall be
subject to its withdrawal or order from time to time. The amount of any losses
incurred in respect of any such investments shall be deposited in the
Certificate Account by the Master Servicer out of its own funds immediately as
realized.
SECTION 4.02. DISTRIBUTIONS.
(a) On each Distribution Date, the Group I Available Distribution
Amount, in the following order of priority, shall be deemed to have been
distributed by REMIC I to REMIC III on account of the REMIC I Regular Interests
or shall be withdrawn from the Custodial Account and distributed to the holders
of the Class R-I Certificates, as the case may be:
(i) to the Holders of REMIC I Regular Interests as provided in
Section 1.03; and
(ii) any remaining portion, to the Holders of the Class R-I
Certificates.
(b) On each Distribution Date, the Group II Available Distribution
Amount, in the following order of priority, shall be deemed to have been
distributed by REMIC II to REMIC III on account of the REMIC II Regular
Interests or shall be withdrawn from the Custodial Account and distributed to
the holders of the Class R-II Certificates, as the case may be:
(i) to the Holders of REMIC II Regular Interests as provided in
Section 1.03; and
(ii) any remaining portion, to the Holders of the Class R-II
Certificates.
(c) On each Distribution Date, the Master Servicer on behalf of the
Trustee or the Paying Agent appointed by the Trustee shall distribute to each
Certificateholder of record on the next preceding Record Date (other than as
provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Master Servicer or the
Paying Agent, as the case may be, or, if such Certificateholder has not so
notified the Master Servicer or the Paying Agent by the Record Date, by check
mailed to such Certificateholder at the address of such Holder appearing in the
Certificate Register such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the following amounts, in the following order of
priority, in each case to the extent of the related Available Distribution
Amount that is attributable to such Class for such Distribution Date:
(i) to the Class A Certificateholders, Accrued Certificate Interest
thereon FOR SUCH DISTRIBUTION DATE MINUS, (A) with respect to the Class
A-I Certificates, any Group I Prepayment Interest Shortfalls for such
Distribution Date and (B) with respect to the Class A-II Certificates, any
Group II Prepayment Interest Shortfalls PLUS in each case Accrued
Certificate Interest thereon remaining unpaid from any previous
Distribution Date;
(ii) (A) to the Class A-I Certificateholders, the Principal
Distribution Amount with respect to Loan Group I for such
Distribution Date, in the following order or priority;
(1) first, to the Class A-I-6 Certificates, the Class
A-I-6 Lockout Distribution Amount for such Distribution
Date, until the Certificate Principal Balance thereof
has been reduced to zero;
(2) second, to the Class A-I-1 Certificates until the
Certificate Principal Balance thereof has been reduced
to zero;
(3) third, to the Class A-I-2 Certificates, until the
Certificate Principal Balance thereof has been reduced
to zero;
(4) fourth, to the Class A-I-3 Certificates, until the
Certificate Principal Balance thereof has been reduced
to zero;
(5) fifth, to the Class A-I-4 Certificates, until the
Certificate Principal Balance thereof has been reduced
to zero;
(6) sixth, to the Class A-I-5 Certificates, until the
Certificate Principal Balance thereof has been reduced
to zero; and
(7) seventh, to the Class A-I-6 Certificates, until the
Certificate Principal Balance thereof has been reduced
to zero.
(B) to the Class A-II Certificateholders, the Principal
Distribution Amount with respect to Loan Group II for such
Distribution Date, until the Certificate Principal Balance thereof
has been reduced to zero;
(C) following the distributions set forth above and in Section
4.02(d), to the Class SB-I Certificateholders, payable from Loan
Group I Available Distribution Amount remaining after such
distributions, the amounts as set forth in Section 1.03 and to the
Class SB-II Certificateholders, payable from Loan Group II Available
Distribution Amounts remaining after such distributions, the amounts
as set forth in Section 1.03; and
(D) following the distributions set forth above and in Section
4.02(d), to the Class R-III Certificateholders, any amounts
remaining after the above distributions.
(d) In addition to the foregoing distributions, on each Distribution
Date the following amounts shall be distributed by the Trustee in the manner set
forth above as follows:
(i) Loan Group I Excess Cash Flow for such Distribution Date will be
applied: FIRST, to pay to the holders of the Class A-I Certificates the
principal portion of Realized Losses incurred (or deemed to have been
incurred) on the Group I Loans for the preceding Prepayment Period (other
than Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses or Extraordinary Losses with respect to such LOAN GROUP); SECOND,
to pay to the holders of the Class A-II Certificates the principal portion
of Realized Losses incurred (or deemed to have been incurred) on the Group
II Loans for the preceding Prepayment Period to the extent not covered by
Loan Group II Excess Cash Flow (other than Excess Special Hazard Losses,
Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses with
respect to such Loan GROUP); THIRD, TO PAY TO THE INSURER GROUP I
CUMULATIVE INSURANCE PAYMENTS; FOURTH, to pay to the Insurer Group II
Cumulative Insurance Payments (to the extent not COVERED BY LOAN GROUP II
EXCESS CASH FLOW); FIFTH, to pay any related Subordination INCREASE AMOUNT
WITH RESPECT TO LOAN GROUP I; SIXTH, to pay the holders of the Class A-I
Certificates the amount of any Group I Prepayment Interest Shortfalls
allocated THERETO; SEVENTH, to pay to the holders of the Class A-II
Certificates the amount of any Group II Prepayment Interest Shortfalls
allocated thereto, to the extent not COVERED BY LOAN GROUP II EXCESS CASH
FLOW ON SUCH DISTRIBUTION DATE; EIGHTH, to pay the holders of the Class
A-I Certificates any Group I Prepayment Interest Shortfalls remaining
unpaid from prior Distribution Dates together with interest thereon at the
related Pass-Through Rate for such Class of Class A-I Certificates to
which such Group I Prepayment Interest Shortfalls were allocated (as
adjusted from time to time), until such Group I Prepayment Interest
Shortfalls have been paid in full; ninth, to pay the Class A-II
Certificates any Group II Prepayment Interest Shortfalls remaining unpaid
from prior Distribution Dates together with interest thereon at the
Pass-Through Rate with respect to the Class A-II Certificates (as adjusted
from time to time), until such Group II Prepayment Interest Shortfalls, to
the extent not COVERED BY LOAN GROUP II EXCESS CASH FLOW, HAVE BEEN PAID
IN FULL; AND TENTH, to pay to the Class A-II Basis Risk Reserve Fund for
distribution to holders of the Class A-II Certificates the amount of any
Class A-II Basis Risk Shortfalls for such Distribution Date, and Class
A-II Basis Risk Shortfalls remaining unpaid with respect to prior
Distribution Dates, together with interest thereon at the related
Pass-Through Rate (to the extent not covered by Loan Group II Excess Cash
Flow); and
(ii) Loan Group II Excess Cash Flow for such Distribution Date
will be APPLIED: FIRST, to pay to the holders of the Class A-II
Certificates the principal portion of Realized Losses incurred (or deemed
to have been incurred) on the Group II Loans for the preceding Prepayment
Period (other than Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses or Extraordinary Losses with respect to SUCH LOAN
GROUP); SECOND, to pay to the holders of the Class A-I Certificates the
principal portion of Realized Losses incurred (or deemed to have been
incurred) on the Group I Loans for the preceding Prepayment Period to the
extent not covered by Loan Group I Excess Cash Flow (other than Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
Extraordinary Losses with respect to such Loan GROUP); THIRD, TO PAY TO
THE INSURER GROUP II CUMULATIVE INSURANCE PAYMENTS; FOURTH, to pay to the
Insurer of Group I Cumulative Insurance Payments (to the extent not
COVERED BY LOAN GROUP I EXCESS CASH FLOW); FIFTH, (a) FIRST on the first
Distribution Date, first to fund the Initial Class A-II Basis Risk Reserve
Fund Deposit and (b) THEN to pay any related Subordination Increase Amount
with respect to Loan Group II; SIXTH, to pay the holders of the Class A-II
Certificates the amount of any Group II PREPAYMENT INTEREST SHORTFALLS
ALLOCATED THERETO; SEVENTH, to pay to the holders of the Class A-I
Certificates the amount of any Group I Prepayment Interest Shortfalls
allocated thereto, to the extent not covered by Loan Group I Excess Cash
Flow on such DISTRIBUTION DATE; EIGHTH, to pay the holders of the Class
A-II Certificates any Group II Prepayment Interest Shortfalls remaining
unpaid from prior Distribution Dates together with interest thereon at the
related Pass-Through Rate for such Class A-II Certificates (as adjusted
from time to time), until such Group II Prepayment INTEREST SHORTFALLS
HAVE BEEN PAID IN FULL; NINTH, to pay the Class A-I Certificates any Group
I Prepayment Interest Shortfalls remaining unpaid from prior Distribution
Dates together with interest thereon at the related Pass-Through Rate for
such Class of Class A-I Certificates to which such Group I Prepayment
Interest Shortfalls were allocated (as adjusted from time to time), until
the payment of such Group I Prepayment Interest Shortfalls, to the extent
not covered by Loan Group I Excess Cash FLOW, HAVE BEEN PAID IN FULL; AND
TENTH, to the Class A-II Basis Risk Reserve Fund the Basis Risk Fund
Deposit for distribution to the holders of the Class A-II Certificates of
the amount of any Class A-II Basis Risk Shortfalls for such Distribution
Date, and Class A-II Basis Risk Shortfalls remaining unpaid with respect
to previous Distribution Dates, together with interest thereon at the
related Pass-Through Rate.
(e) Within five Business Days before the related Distribution Date,
the Master Servicer shall notify the Trustee of the amounts, if any, payable to
the Insurer pursuant to Sections 4.02(d)(i) and (ii).
(f) In addition to the foregoing distributions, with respect to any
Mortgage Loan that was previously the subject of a Cash Liquidation or an REO
Disposition that resulted in a Realized Loss, in the event that within two years
of the date on which such Realized Loss was determined to have occurred the
Master Servicer receives amounts which the Master Servicer reasonably believes
to represent subsequent recoveries (net of any related liquidation expenses), or
determines that it holds surplus amounts previously reserved to cover estimated
expenses specifically related to such Mortgage Loan (including, but not limited
to, recoveries (net of any related liquidation expenses) in respect of the
representations and warranties made by the related Seller pursuant to the
applicable Seller's Agreement), the Master Servicer shall distribute such
amounts to the Class or Classes to which such Realized Loss was allocated (with
the amounts to be distributed allocated among such Classes in the same
proportions as such Realized Loss was allocated), and within each such Class to
the Certificateholders of record as of the Record Date immediately preceding the
date of such distribution (or of such Class of Certificates is no longer
outstanding, to the Certificateholders of record at the time that such Realized
Loss was allocated); provided that no such distribution to any Class of
Certificates of subsequent recoveries related to a Mortgage Loan shall exceed,
either individually or in the aggregate and together with any other amounts paid
in reimbursement therefor, the amount of the related Realized Loss that was
allocated to such Class of Certificates. For the purposes of this Section
4.02(f) any allocation of a Realized Loss to Loan Group I Excess Cash Flow or
Loan Group II Excess Cash Flow will be treated as an allocation of a Realized
Loss to the Class SB-I Certificates or Class SB-II Certificates, respectively.
Notwithstanding the foregoing, to the extent that the Master Servicer receives
recoveries with respect to Realized Losses which were allocated to the Class A
Certificates and which were paid by the Insurer pursuant to the related Policy
and not previously reimbursed pursuant to Section 4.02(d), such recoveries shall
be paid directly to the Insurer and applied to reduce the Group I Cumulative
Insurance Payments or Group II Cumulative Insurance Payments, as applicable,
then due to the Insurer prior to any payment of such amounts to any current
Certificateholder or any previous Certificateholder. Any amounts to be so
distributed shall not be remitted to or distributed from the Trust Fund, and
shall constitute subsequent recoveries with respect to Mortgage Loans that are
no longer assets of the Trust Fund.
(g) Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents and none of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicer shall have any
responsibility therefor.
(h) Except as otherwise provided in Section 9.01, if the Master
Servicer anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Master Servicer
shall, no later than the Determination Date in the month of such final
distribution, notify the Trustee and the Insurer and the Trustee shall, no later
than two (2) Business Days after such Determination Date, mail on such date to
each Holder of such Class of Certificates a notice to the effect that: (i) the
Trustee anticipates that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date but only upon presentation
and surrender of such Certificates at the office of the Trustee or as otherwise
specified therein, and (ii) no interest shall accrue on such Certificates from
and after the end of the prior calendar month. In the event that
Certificateholders do not surrender their Certificates for final cancellation,
the Trustee shall cause such funds to be withdrawn from the Certificate Account
and credited to a separate escrow account for the benefit of such
Certificateholders as provided in Section 9.01(d).
SECTION 4.03. STATEMENTS TO CERTIFICATEHOLDERS.
(a) Concurrently with each distribution charged to the Certificate
Account and with respect to each Distribution Date the Master Servicer shall
forward to the Trustee and the Trustee shall forward by mail to each Holder, the
Depositor and the Insurer a statement setting forth the following information as
to each Class of Certificates and each Loan Group, in each case to the extent
applicable:
(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included therein
representing Principal Prepayments;
(ii) the amount of such distribution to Holders of such Class
of Certificates allocable to interest;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to
such Holders if there were sufficient funds available therefor, the amount
of the shortfall;
(iv) the amount of any Advance by the Master Servicer pursuant
to Section 4.04;
(v) the number of Group I Loans and the Loan Group I Stated
Principal Balance after giving effect to the distribution of principal on
such Distribution Date and the number of Group II Loans and the Loan Group
II Stated Principal Balance after giving effect to the distribution of
principal on such Distribution Date;
(vi) the aggregate Certificate Principal Balance of each Class
of the Certificates and each of the Class A-I Percentage and Class A-II
Percentage after giving effect to the amounts distributed on such
Distribution Date, separately identifying any reduction thereof due to
Realized Losses other than pursuant to an actual distribution of
principal;
(vii) on the basis of the most recent reports furnished to it
by Subservicers, the number and aggregate principal balances of Mortgage
Loans that are Delinquent (A) one month, (B) two months and (C) three or
more months and the number and aggregate principal balance of Mortgage
Loans that are in foreclosure;
(viii) the number, aggregate principal balance and book value
of any REO Properties;
(ix) the aggregate Accrued Certificate Interest remaining
unpaid, if any, for each Class of Certificates, after giving effect to the
distribution made on such Distribution Date;
(x) the related Targeted Subordinated Amount and Subordinated
Amount, after giving effect to distributions made on such Distribution
Date;
(xi) the aggregate amount of Realized Losses for such
Distribution Date and the aggregate amount of Realized Losses on the
Mortgage Loans incurred since the Cut-off Date;
(xii) the aggregate amount of any recoveries on previously
foreclosed loans from Sellers due to a breach of representation or
warranty;
(xiii) the weighted average remaining term to maturity of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date;
(xiv) the weighted average Mortgage Rates of the Mortgage
Loans after giving effect to the amounts distributed on such Distribution
Date;
(xv) the amount of any Insured Amount paid on such
Distribution Date, the amount of any reimbursement payment made to the
Insurer on such Distribution Date pursuant to Section 4.02(d) and the
amount of Cumulative Insurance Amounts after giving effect to any such
Insured Amount or any such reimbursement payment to the Insurer;
(xvi) the Special Hazard Amount, Fraud Loss Amount and
Bankruptcy Amount as of the close of business on such Distribution Date
and a description of any change in the calculation of such amounts;
(xvii) the Pass-Through Rates on the Class A-I-5, Class A-I-6,
and Class A-II Certificates for such Distribution Date;
(xviii) [Reserved]
(xix) the amount of Group I Prepayment Interest Shortfalls,
Group II Prepayment Interest Shortfalls and Class A-II Basis Risk
Shortfalls for such Distribution Date and the amount of Group I Prepayment
Interest Shortfalls, Group II Prepayment Interest Shortfalls and Class
A-II Basis Risk Shortfalls for any previous Distribution Date that remain
unpaid, together with Accrued Interest thereon.
In the case of information furnished pursuant to clauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Certificate with a $1,000
denomination. In addition to the statement provided to the Trustee as set forth
in this Section 4.03(a), the Master Servicer shall provide to any manager of a
trust fund consisting of some or all of the Certificates, upon reasonable
request, such additional information as is reasonably obtainable by the Master
Servicer at no additional expense to the Master Servicer.
(b) Within a reasonable period of time after the end of each
calendar year, the Master Servicer shall prepare, or cause to be prepared, and
the Trustee shall forward, or cause to be forwarded, to each Person who at any
time during the calendar year was the Holder of a Certificate, other than a
Class R Certificate, a statement containing the information set forth in clauses
(i) and (ii) of subsection (a) above aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Master Servicer and Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer and Trustee pursuant to any requirements of the
Code.
(c) Within a reasonable period of time after the end of each
calendar year, the Master Servicer shall prepare, or cause to be prepared, and
the Trustee shall forward, or cause to be forwarded, to each Person who at any
time during the calendar year was the Holder of a Class R Certificate, a
statement containing the applicable distribution information provided pursuant
to this Section 4.03 aggregated for such calendar year or applicable portion
thereof during which such Person was the Holder of a Class R Certificate. Such
obligation of the Master Servicer and Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer and Trustee pursuant to any requirements of the
Code.
(d) As soon as reasonably practicable, upon the written request of
any Certificateholder, the Master Servicer shall provide the requesting
Certificateholder with such information as is necessary and appropriate, in the
Master Servicer's sole discretion, for purposes of satisfying applicable
reporting requirements under Rule 144A.
SECTION 4.04. DISTRIBUTION OF REPORTS TO THE TRUSTEE AND THE
DEPOSITOR; ADVANCES BY THE MASTER SERVICER.
(a) Prior to the close of business on the Business Day next
succeeding each Determination Date, the Master Servicer shall furnish a written
statement to the Trustee, the Insurer, any Paying Agent and the Depositor (the
information in such statement to be made available to Certificateholders by the
Master Servicer on request) (provided that the Master Servicer will use its best
efforts to deliver such written statement not later than 12:00 p.m. New York
time on the second Business Day prior to the Distribution Date) setting forth
(i) the Available Distribution Amount, (ii) the amounts required to be withdrawn
from the Custodial Account and deposited into the Certificate Account on the
immediately succeeding Certificate Account Deposit Date pursuant to clause (iii)
of Section 4.01(a), (iii) the Certificate Insurer Premium and, if the Master
Servicer determines that a Deficiency Amount exists for such Distribution Date,
the amount necessary to complete the notice in the form of Exhibit A to each of
the Policies (the "Notice"), (iv) Group I Cumulative Insurance Payments and
Group II Cumulative Insurance Payments after giving effect to the distributions
to be made pursuant to Section 4.02 on such Distribution Date, (v) the amount of
Group I Prepayment Interest Shortfalls or Group II Prepayment Interest
Shortfalls, and Class A-II Basis Risk Shortfalls, (vi) the amount of the Class
A-II Basis Risk Shortfalls remaining unpaid with respect to the prior
Distribution Dates, (vii) interest on the Class A-II Basis Risk Shortfalls at
the Pass-Through Rate and (viii) to the extent required, a report detailing the
Stated Principal Balance, Mortgage Rate, Modified Mortgage Rate, remaining term
to maturity and Monthly Payment for any Modified Mortgage Loan pursuant to
Section 3.07. The determination by the Master Servicer of such amounts shall, in
the absence of obvious error, be presumptively deemed to be correct for all
purposes hereunder and the Trustee shall be protected in relying upon the same
without any independent check or verification.
(b) On or before 2:00 P.M. New York time on each Certificate Account
Deposit Date, the Master Servicer shall either (i) deposit in the Certificate
Account from its own funds, or funds received therefor from the Subservicers, an
amount equal to the Advances to be made by the Master Servicer in respect of the
related Distribution Date, which shall be in an aggregate amount equal to the
aggregate amount of Monthly Payments (with each interest portion thereof
adjusted to a per annum rate equal to the sum of the Net Mortgage Rate plus the
Certificate Insurer Premium Rate), less the amount of any related Servicing
Modifications, Debt Service Reductions or reductions in the amount of interest
collectable from the Mortgagor pursuant to the Relief Act or similar legislation
or regulations then in effect, on the Outstanding Mortgage Loans as of the
related Due Date in the related Due Period, which Monthly Payments were
delinquent as of the close of business as of the related Determination Date;
provided that no Advance shall be made if it would be a Nonrecoverable Advance,
(ii) withdraw from amounts on deposit in the Custodial Account and deposit in
the Certificate Account all or a portion of the Amount Held for Future
Distribution in discharge of any such Advance, or (iii) make advances in the
form of any combination of (i) and (ii) aggregating the amount of such Advance.
Any portion of the Amount Held for Future Distribution so used shall be replaced
by the Master Servicer by deposit in the Certificate Account on or before 11:00
A.M. New York time on any future Certificate Account Deposit Date to the extent
that funds attributable to the Mortgage Loans that are available in the
Custodial Account for deposit in the Certificate Account on such Certificate
Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date. The Master Servicer shall be
entitled to use any Advance made by a Subservicer as described in Section
3.07(b) that has been deposited in the Custodial Account on or before such
Distribution Date as part of the Advance made by the Master Servicer pursuant to
this Section 4.04.
The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor, the Insurer and the Trustee.
In the event that the Master Servicer determines as of the Business
Day preceding any Certificate Account Deposit Date that it will be unable to
deposit in the Certificate Account an amount equal to the Advance required to be
made for the immediately succeeding Distribution Date, it shall give notice to
the Trustee and the Insurer of its inability to advance (such notice may be
given by telecopy), not later than 3:00 P.M., New York time, on such Business
Day, specifying the portion of such amount that it will be unable to deposit.
Not later than 3:00 P.M., New York time, on the Certificate Account Deposit Date
the Trustee shall, unless by 12:00 Noon, New York time, on such day the Trustee
shall have been notified in writing (by telecopy) that the Master Servicer shall
have directly or indirectly deposited in the Certificate Account such portion of
the amount of the Advance as to which the Master Servicer shall have given
notice pursuant to the preceding sentence, pursuant to Section 7.01, (a)
terminate all of the rights and obligations of the Master Servicer under this
Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder, including the obligation to
deposit in the Certificate Account an amount equal to the Advance for the
immediately succeeding Distribution Date.
The Trustee shall deposit all funds it receives pursuant to this
Section 4.04 into the Certificate Account.
SECTION 4.05. ALLOCATION OF REALIZED LOSSES.
(a) Prior to each Distribution Date, the Master Servicer shall
determine the total amount of Realized Losses, if any, that resulted from any
Cash Liquidation, Servicing Modifications, Debt Service Reduction, Deficient
Valuation or REO Disposition that occurred during the related Prepayment Period
or, in the case of a Servicing Modification that constitutes a reduction of the
interest rate on a Mortgage Loan, the amount of the reduction in the interest
portion of the Monthly Payment due in the month in which such Distribution Date
occurs. The amount of each Realized Loss shall be evidenced by an Officers'
Certificate. All Realized Losses (other than Excess Special Hazard Losses,
Extraordinary Losses, Excess Bankruptcy Losses and Excess Fraud Losses), will be
allocated: FIRST, to the Loan Group I Excess Cash Flow for the related
Distribution Date in the case of Realized Losses on the Group I Loans and to the
Loan Group II Excess Cash Flow for the RELATED DISTRIBUTION DATE IN THE CASE OF
REALIZED LOSSES ON THE GROUP II LOANS; SECOND, to the Loan Group I Excess Cash
Flow for the related Distribution Date in the case of Realized Losses on the
Group II Loans (but only to the extent remaining after covering Realized Losses
related to Loan Group I) and to the Loan Group II Excess Cash Flow for the
related Distribution Date in the case of Realized Losses on the Group I Loans
(but only to the EXTENT REMAINING AFTER COVERING REALIZED LOSSES RELATED TO LOAN
GROUP II); THIRD, to the related Class SB Certificates up to an amount equal to
(i) in the case of the Group I Loans, the excess, if any, of (x) the then
aggregate Stated Principal Balance of the Group I Loans over (y) the then
aggregate Certificate Principal Balance of the Class A-I Certificates and (ii)
in the case of the Group II Loans, the excess, if any, of (x) the then aggregate
Stated Principal Balance of the Group II Loans over (y) the then aggregate
CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-II CERTIFICATES; FOURTH, to the
Class of Class SB Certificates related to the other Loan Group to the extent of
the excess described in CLAUSE THIRD remaining after giving effect to such
clause for such Distribution Date; and FIFTH, in the case of Realized Losses on
the Group I Loans, among all the classes of Class A-I Certificates on a pro rata
basis and in the case of Realized Losses on Group II Loans, among the Class A-II
Certificates; provided that the aggregate amount of Realized Losses allocated to
the Loan Group I Excess Cash Flow, Loan Group II Excess Cash Flow, or the Class
SB Certificates pursuant to this Section 4.05(a) in respect of Realized Losses
on the Group I Loans or the Group II Loans shall not exceed the Group I or Group
II Cumulative Insurance Payment at the time of Determination. Any Excess Special
Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses and Extraordinary
Losses will be allocated among all the Class A-I and Class SB-I Certificates, in
the case of such losses on Mortgage Loans in Loan Group I, and among the Class
A-II and Class SB-II Certificates, in the case of such losses on Mortgage Loans
in Loan Group II, in each case on a pro rata basis, as described below.
As used herein, an allocation of a Realized Loss on a "pro rata
basis" among two or more specified Classes of Certificates means an allocation
on a pro rata basis, among the various Classes so specified, to each such Class
of Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date in the case of the principal portion of a Realized Loss or in accordance
with the definition of Accrued Certificate Interest in the case of an interest
portion of a Realized Loss. Any allocation of the principal portion of Realized
Losses (other than Debt Service Reductions) to a Class of Certificates shall be
made by reducing the Certificate Principal Balance thereof by the amount so
allocated, which allocation shall be deemed to have occurred on such
Distribution Date. Any allocation of the principal portion of Realized Losses to
the Class SB Certificates, shall be made by operation of the definition of
"Certificate Principal Balance" and by operation of the provisions of Section
4.02(c). Allocations of the interest portions of Realized Losses shall be made
by operation of the definition of "Accrued Certificate Interest" and by
operation of the provisions of Section 4.02(c). All Realized Losses and all
other losses allocated to a Class of Certificates hereunder will be allocated
among the Certificates of such Class in proportion to the Percentage Interests
evidenced thereby.
(b) All Realized Losses on the Group I Mortgage Loans shall be
allocated to the REMIC I Regular Interests in accordance with Section 1.03.
Realized Losses on the Group II Mortgage Loans shall be allocated to each Class
of the REMIC II Regular Interests in accordance with Section 1.03.
SECTION 4.06. REPORTS OF FORECLOSURES AND ABANDONMENT OF
MORTGAGED PROPERTY.
The Master Servicer or the Subservicers shall file information
returns with respect to the receipt of mortgage interest received in a trade or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and the informational returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property required by Sections 6050H, 6050J and
6050P of the Code, respectively, and deliver to the Trustee an Officers'
Certificate on or before March 31 of each year stating that such reports have
been filed. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.
SECTION 4.07. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
As to any Mortgage Loan which is delinquent in payment by 90 days or
more, the Master Servicer may, at its option, purchase such Mortgage Loan from
the Trustee at the Purchase Price therefor. If at any time the Master Servicer
makes a payment to the Certificate Account covering the amount of the Purchase
Price for such a Mortgage Loan, and the Master Servicer provides to the Trustee
a certification signed by a Servicing Officer stating that the amount of such
payment has been deposited in the Certificate Account, then the Trustee shall
execute the assignment of such Mortgage Loan at the request of the Master
Servicer without recourse to the Master Servicer which shall succeed to all the
Trustee's right, title and interest in and to such Mortgage Loan, and all
security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. The Master Servicer will thereupon own such
Mortgage, and all such security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.
SECTION 4.08. THE POLICIES.
(a) If pursuant to Section 4.04(a)(iii), the Master Servicer
determines that a Deficiency Amount exists for such Distribution Date, the
Trustee shall complete the Notice and submit such Notice in accordance with the
related Policy to the Insurer no later than 12:00 P.M., New York City time, on
the Business Day immediately preceding each Distribution Date, as a claim for an
Insured Amount (provided that the Trustee shall submit such notice on the second
Business Day immediately preceding such Distribution Date if it is able to do
so) in an amount equal to such Deficiency Amount.
(b) The Trustee shall establish and maintain the Insurance Account
on behalf of the Holders of the Class A Certificates. Upon receipt of an Insured
Amount from the Insurer on behalf of the Class A Certificateholders, the Trustee
shall deposit such Insured Amount in the Insurance Account. All amounts on
deposit in the Insurance Account shall remain uninvested. On each Distribution
Date, the Trustee shall transfer any Insured Amount then on deposit in the
Insurance Account to the Certificate Account. The Trustee shall distribute on
each Distribution Date the Deficiency Amount with respect to each Loan Group for
such Distribution Date from the Certificate Account, together with the
distributions due to the Class A Certificateholders on such Distribution Date,
as follows: (i) the portion of any such Deficiency Amount related to clauses (i)
and (ii) of the definition of Deficiency Amount shall be distributed among the
related Class A Certificateholders on a pro rata basis in accordance with their
respective shortfalls or allocations of Realized Losses; and (ii) the portion of
any such Deficiency Amount related to clause (iii) of the definition of
Deficiency Amount shall be distributed to the related Class A Certificateholders
in accordance with Section 9.01(c).
(c) The Trustee shall (i) receive as attorney-in-fact of each Class
A Certificateholder any Insured Amount from the Insurer and (ii) distribute such
Insured Amount to such Class A Certificateholders as set forth in subsection (b)
above. Insured Amounts disbursed by the Trustee from proceeds of the related
Policy shall not be considered payment by the Trust Fund with respect to the
related Class A Certificates, nor shall such disbursement of such Insured
Amounts discharge the obligations of the Trust Fund with respect to the amounts
thereof, and the Insurer shall become owner of such amounts to the extent
covered by such Insured Amounts as the deemed assignee of such Class A
Certificateholders. The Trustee hereby agrees on behalf of each Class A
Certificateholder (and each Class A Certificateholder, by its acceptance of its
Class A Certificates, hereby agrees) for the benefit of the Insurer that the
Trustee shall recognize that to the extent the Insurer pays Insured Amounts,
either directly or indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Insurer will be entitled to be subrogated to the rights
of the Class A Certificateholders to the extent of such payments.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. THE CERTIFICATES.
(a) The Class A, Class SB and Class R Certificates shall be
substantially in the forms set forth in Exhibits A-1, A-2, and B and shall, on
original issue, be executed and delivered by the Trustee to the Certificate
Registrar for authentication and delivery to or upon the order of the Depositor
upon receipt by the Trustee or one or more Custodians of the documents specified
in Section 2.01. The Certificates, other than the Class SB Certificates and
Class R Certificates, shall be issuable in minimum dollar denominations of
$25,000 and integral multiples of $1 in excess thereof. The Class SB
Certificates shall be issuable in minimum Percentage Interests of 10.0% and
integral multiples of .01% in excess thereof. The Class R Certificates of each
respective REMIC shall be issuable in minimum PERCENTAGE INTERESTS OF 20.0% AND
INTEGRAL MULTIPLES OF 0.01% IN EXCESS THEREOF; PROVIDED, HOWEVER, that one Class
R Certificate will be issuable to the REMIC Administrator as "tax matters
person" pursuant to Section 10.01(c) in a minimum denomination representing a
Percentage Interest of not less than 0.01%.
The Certificates shall be executed by manual or facsimile signature
on behalf of an authorized officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Trustee shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificate or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by the Certificate Registrar by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
(b) The Class A Certificates shall initially be issued as one or
more Certificates registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to each of the Class A Certificates, through the book-entry facilities of
the Depository and, except as provided below, shall not be entitled to
Definitive Certificates in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall transfer the Ownership Interests only in the
Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures.
The Trustee, the Master Servicer and the Depositor may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the respective Classes
of Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of any Class of Book-Entry Certificates with respect to any particular
matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record date
in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Depositor is unable to locate a
qualified successor or (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall issue the Definitive Certificates. Neither the
Depositor, the Master Servicer nor the Trustee shall be liable for any actions
taken by the Depository or its nominee, including, without limitation, any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depositor in connection with the issuance of the Definitive
Certificates pursuant to this Section 5.01 shall be deemed to be imposed upon
and performed by the Trustee, and the Trustee and the Master Servicer shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
SECTION 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee is initially appointed Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. The Certificate Registrar, or the Trustee, shall provide the
Master Servicer with a certified list of Certificateholders as of each Record
Date prior to the related Determination Date.
(b) Upon surrender for registration of transfer of any Certificate
at any office or agency of the Trustee maintained for such purpose pursuant to
Section 8.12 and, in the case of any Class SB or Class R Certificate, upon
satisfaction of the conditions set forth below, the Trustee shall execute and
the Certificate Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate Registrar
shall authenticate and deliver the Certificates of such Class which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
(d) No transfer, sale, pledge or other disposition of a Class SB or
Class R Certificate shall be made unless such transfer, sale, pledge or other
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with said Act and laws. Except as otherwise provided in
this Section 5.02(d), in the event that a transfer of a Class SB or Class R
Certificate is to be made, (i) unless the Depositor directs the Trustee
otherwise, the Trustee shall require a written Opinion of Counsel acceptable to
and in form and substance satisfactory to the Trustee and the Depositor that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee, the Trust Fund, the Depositor or the Master Servicer, and (ii)
the Trustee shall require the transferee to execute a representation letter,
substantially in the form of Exhibit G-1 hereto, and the Trustee shall require
the transferor to execute a representation letter, substantially in the form of
Exhibit I hereto, each acceptable to and in form and substance satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which representation letters shall not be an
expense of the Trustee, the Trust Fund, the Depositor or the Master Servicer. In
lieu of the requirements set forth in the preceding sentence, transfers of Class
SB or Class R Certificates may be made in accordance with this Section 5.02(d)
if the prospective transferee of such a Certificate provides the Trustee and the
Master Servicer with an investment letter substantially in the form of Exhibit L
attached hereto, which investment letter shall not be an expense of the Trustee,
the Depositor, or the Master Servicer, and which investment letter states that,
among other things, such transferee (i) is a "qualified institutional buyer" as
defined under Rule 144A, acting for its own account or the accounts of other
"qualified institutional buyers" as defined under Rule 144A, and (ii) is aware
that the proposed transferror intends to rely on the exemption from registration
requirements under the 1933 Act provided by Rule 144A. The Holder of a Class SB
or Class R Certificate desiring to effect any transfer, sale, pledge or other
disposition shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer and the Certificate Registrar against any
liability that may result if the transfer, sale, pledge or other disposition is
not so exempt or is not made in accordance with such federal and state laws and
this Agreement.
(e) In the case of any Class SB or Class R Certificate presented for
registration in the name of an employee benefit plan or other plan subject to
the prohibited transaction provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Code (or comparable
provisions of any subsequent enactments) or any Person (including an investment
manager, a named fiduciary or a trustee of any such plan) who is using "plan
assets" of any such plan to effect such acquisition, the Trustee shall require
an Opinion of Counsel acceptable to and in form and substance satisfactory to
the Trustee, the Depositor and the Master Servicer to the effect that the
purchase or holding of a Class SB or Class R Certificate, as applicable, is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code, and will not subject the Trustee, the Depositor or the Master Servicer
to any obligation or liability (including obligations or liabilities under ERISA
or Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the Depositor
or the Master Servicer. The Trustee shall require that any prospective
transferee of a Class SB or Class R Certificate provide either a certification
to the effect set forth in paragraph six of Exhibit G (with respect to any Class
SB Certificate) or paragraph fourteen of Exhibit F-1 (with respect to any Class
R Certificate), which the Trustee may rely upon without further inquiry or
investigation, or such certifications as the Trustee may deem desirable or
necessary in order to establish that such transferee or the Person in whose name
such registration is requested either (a) is not an employee benefit plan or
other plan subject to the prohibited transaction provisions of ERISA or Section
4975 of the Code, or any Person (including an investment manager, a named
fiduciary or a trustee of any such plan) who is using "plan assets" of any such
plan to effect such acquisition or (b) in the case of any Class SB Certificate,
the following conditions are satisfied: (i) such Transferee is an insurance
company, (ii) the source of funds used to purchase or hold such Certificate (or
interest therein) is an "insurance company general account" (as defined in U.S.
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60, and
(iii) the conditions set forth in Section I and III of PTCE 95-60 have been
satisfied (each entity that satisfies this clause (b), a "Complying Insurance
Company").
(f) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trustee or its designee under clause (iii)(A)
below to deliver payments to a Person other than such Person and to negotiate
the terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale. The rights of each Person acquiring any Ownership Interest in a
Class R Certificate are expressly subject to the following provisions:
(i) (A) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall be a Permitted Transferee
and shall promptly notify the Trustee of any change or impending
change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Class R Certificate until its receipt of, (I) an affidavit and
agreement (a "Transfer Affidavit and Agreement," in the form
attached hereto as Exhibit F-1) from the proposed Transferee, in
form and substance satisfactory to the Master Servicer, representing
and warranting, among other things, that it is a Permitted
Transferee, that it is not acquiring its Ownership Interest in the
Class R Certificate that is the subject of the proposed Transfer as
a nominee, trustee or agent for any Person who is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in
a Class R Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions of this Section
5.02(f) and agrees to be bound by them, and (II) a certificate, in
the form attached hereto as Exhibit F-2, from the Holder wishing to
transfer the Class R Certificate, in form and substance satisfactory
to the Master Servicer, representing and warranting, among other
things, that no purpose of the proposed Transfer is to impede the
assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this Agreement
has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Class R
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (x) to require a
Transfer Affidavit and Agreement from any other Person to whom such
Person attempts to transfer its Ownership Interest in a Class R
Certificate and (y) not to transfer its Ownership Interest unless it
provides a certificate to the Trustee in the form attached hereto as
Exhibit F-2.
(E) Each Person holding or acquiring an Ownership
Interest in a Class R Certificate, by purchasing an Ownership
Interest in such Certificate, agrees to give the Trustee written
notice that it is a "pass-through interest holder" within the
meaning of Temporary Treasury Regulations Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership Interest
in a Class R Certificate, if it is, or is holding an Ownership
Interest in a Class R Certificate on behalf of, a "pass-through
interest holder."
(ii) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the
form attached hereto as Exhibit F-2 and all of such other documents as
shall have been reasonably required by the Trustee as a condition to such
registration. Transfers of the Class R Certificates to Non-United States
Persons and Disqualified Organizations (as defined in Section 860E(e)(5)
of the Code) are prohibited.
(iii) (A) If any Disqualified Organization shall become a
holder of a Class R Certificate, then the last preceding Permitted
Transferee shall be restored, to the extent permitted by law, to all
rights and obligations as Holder thereof retroactive to the date of
registration of such Transfer of such Class R Certificate. If a Non-United
States Person shall become a holder of a Class R Certificate, then the
last preceding United States Person shall be restored, to the extent
permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Class R
Certificate. If a transfer of a Class R Certificate is disregarded
pursuant to the provisions of Treasury Regulations Section 1.860E-1 or
Section 1.860G-3, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of
such Class R Certificate. The Trustee shall be under no liability to any
Person for any registration of Transfer of a Class R Certificate that is
in fact not permitted by this Section 5.02(f) or for making any payments
due on such Certificate to the holder thereof or for taking any other
action with respect to such holder under the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of
a Class R Certificate in violation of the restrictions in this
Section 5.02(f) and to the extent that the retroactive restoration
of the rights of the Holder of such Class R Certificate as described
in clause (iii)(A) above shall be invalid, illegal or unenforceable,
then the Master Servicer shall have the right, without notice to the
holder or any prior holder of such Class R Certificate, to sell such
Class R Certificate to a purchaser selected by the Master Servicer
on such terms as the Master Servicer may choose. Such purported
Transferee shall promptly endorse and deliver each Class R
Certificate in accordance with the instructions of the Master
Servicer. Such purchaser may be the Master Servicer itself or any
Affiliate of the Master Servicer. The proceeds of such sale, net of
the commissions (which may include commissions payable to the Master
Servicer or its Affiliates), expenses and taxes due, if any, will be
remitted by the Master Servicer to such purported Transferee. The
terms and conditions of any sale under this clause (iii)(B) shall be
determined in the sole discretion of the Master Servicer, and the
Master Servicer shall not be liable to any Person having an
Ownership Interest in a Class R Certificate as a result of its
exercise of such discretion.
(iv) The Master Servicer, on behalf of the Trustee, shall make
available, upon written request from the Trustee, all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Class R Certificate to any Person who is a
Disqualified Organization, including the information regarding "excess
inclusions" of such Class R Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B) as a
result of any regulated investment company, real estate investment trust,
common trust fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a Class R
Certificate having as among its record holders at any time any Person who
is a Disqualified Organization. Reasonable compensation for providing such
information may be required by the Master Servicer from such Person.
(v) The provisions of this Section 5.02(f) set forth prior to
this clause (v) may be modified, added to or eliminated, provided that
there shall have been delivered to the Trustee the following:
(A) written consent of the Insurer and written
notification from each Rating Agency to the effect that the
modification, addition to or elimination of such provisions will not
cause such Rating Agency to downgrade its then-current ratings, if
any, of any Class of the Class A Certificates below the lower of the
then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency without taking into
account the related Policy; and
(B) subject to Section 10.01(f), a certificate of the
Master Servicer stating that the Master Servicer has received an
Opinion of Counsel, in form and substance satisfactory to the Master
Servicer, to the effect that such modification, addition to or
absence of such provisions will not cause any REMIC to cease to
qualify as a REMIC and will not cause (x) any REMIC to be subject to
an entity-level tax caused by the Transfer of any Class R
Certificate to a Person that is a Disqualified Organization or (y) a
Certificateholder or another Person to be subject to a REMIC-related
tax caused by the Transfer of a Class R Certificate to a Person that
is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange of
Certificates of any Class, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
SECTION 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
SECTION 5.04. PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer, the Depositor, the Master Servicer, the Insurer, the Trustee, the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Insurer, the Trustee or the Certificate Registrar may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.02 and for all other
purposes whatsoever, except as and to the extent provided in the definition of
"Certificateholder" and in Section 4.08, and neither the Depositor, the Master
Servicer, the Trustee, the Insurer, the Certificate Registrar nor any agent of
the Depositor, the Master Servicer, the Trustee or the Certificate Registrar
shall be affected by notice to the contrary except as provided in Section
5.02(f).
SECTION 5.05. APPOINTMENT OF PAYING AGENT.
The Trustee may, with the consent of the Insurer (so long as no
Insurer Default exists), which consent shall not be unreasonably withheld,
appoint a Paying Agent for the purpose of making distributions to
Certificateholders pursuant to Section 4.02. In the event of any such
appointment, on or prior to each Distribution Date the Master Servicer on behalf
of the Trustee shall deposit or cause to be deposited with the Paying Agent a
sum sufficient to make the payments to Certificateholders in the amounts and in
the manner provided for in Section 4.02, such sum to be held in trust for the
benefit of Certificateholders.
The Trustee shall cause each Paying Agent to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee that such Paying Agent will hold all sums held by it for the payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Any sums so
held by such Paying Agent shall be held only in Eligible Accounts to the extent
such sums are not distributed to the Certificateholders on the date of receipt
by such Paying Agent.
SECTION 5.06. OPTIONAL PURCHASE OF CERTIFICATES
(a) On any Distribution Date on or after the Loan Group I Optional
Termination Date or Loan Group II Optional Termination Date, either the Master
Servicer or the Depositor shall have the right, at its option, to purchase the
Classes of Certificates with respect to the related Loan Group in whole, but not
in part, at a price equal to the outstanding Certificate Principal Balance of
the related Certificates plus Accrued Certificate Interest thereon for the
related Interest Accrual Period and any previously unpaid Accrued Certificate
Interest, including any Group I Prepayment Interest Shortfalls and Group II
Prepayment Interest Shortfalls, as applicable, remaining unpaid on the preceding
Distribution Date, together with interest thereon at the related Pass-Through
Rate for such Class of Certificates to which such Group I Prepayment Interest
Shortfalls or Group II Prepayment Interest Shortfalls as applicable, were
allocated (as adjusted from time to time, with respect to the Class A-II
Certificates) until such Group I Prepayment Interest Shortfalls or Group II
Prepayment Interest Shortfalls have been paid in full.
(b) The Master Servicer or the Depositor, as applicable, shall give
the Trustee not less than 60 days' prior notice of the Distribution Date on
which the Master Servicer or the Depositor, as applicable, anticipates that it
will purchase the Certificates pursuant to Section 5.06(a). Notice of any such
purchase, specifying the Distribution Date upon which the Holders may surrender
their Certificates to the Trustee for payment in accordance with this Section
5.06, shall be given promptly by the Master Servicer or the Depositor, as
applicable, by letter to Certificateholders (with a copy to the Certificate
Registrar, the Insurer and each Rating Agency) mailed not earlier than the 15th
day and not later than the 25th day of the month next preceding the month of
such final distribution specifying:
(i) the Distribution Date upon which purchase of the
Certificates is anticipated to be made upon presentation and surrender of
such Certificates at the office or agency of the Trustee therein
designated,
(ii) the purchase price therefor, if known, and
(iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office or agency of
the Trustee therein specified.
If either the Master Servicer or the Depositor gives the notice specified above,
the Master Servicer or the Depositor, as applicable, shall deposit in the
Certificate Account before the Distribution Date on which the purchase pursuant
to Section 5.06(a) is to be made, in immediately available funds, an amount
equal to the purchase price for the Certificates computed as provided above.
(c) Upon presentation and surrender of the Certificates to be
purchased pursuant to Section 5.06(a) by the Holders thereof, the Trustee shall
distribute to such Holders an amount equal to the outstanding Certificate
Principal Balance thereof plus the sum of Accrued Certificate Interest thereon
for the related Interest Accrual Period and any previously unpaid Accrued
Certificate Interest with respect thereto, including any Group I Prepayment
Interest Shortfalls and Group II Prepayment Interest Shortfalls, as applicable,
remaining unpaid on the preceding Distribution Date, together with interest
thereon at the related Pass-Through Rate, until such Group I Prepayment Interest
Shortfalls or Group II Prepayment Interest Shortfalls, as applicable, are paid
in full.
(d) In the event that any Certificateholders do not surrender their
Certificates on or before the Distribution Date on which a purchase pursuant to
this Section 5.06 is to be made, the Trustee shall on such date cause all funds
in the Certificate Account deposited therein by the Master Servicer or the
Depositor, as applicable, pursuant to Section 5.06(b) to be withdrawn therefrom
and deposited in a separate escrow account for the benefit of such
Certificateholders, and the Master Servicer or the Depositor, as applicable,
shall give a second written notice to such Certificateholders to surrender their
Certificates for payment of the purchase price therefor. If within six months
after the second notice any Certificate shall not have been surrendered for
cancellation, the Trustee shall take appropriate steps as directed by the Master
Servicer or the Depositor, as applicable, to contact the Holders of such
Certificates concerning surrender of their Certificates. The costs and expenses
of maintaining the escrow account and of contacting Certificateholders shall be
paid out of the assets which remain in the escrow account. If within nine months
after the second notice any Certificates shall not have been surrendered for
cancellation in accordance with this Section 5.06, the Trustee shall pay to the
Master Servicer or the Depositor, as applicable, all amounts distributable to
the Holders thereof and the Master Servicer or the Depositor, as applicable,
shall thereafter hold such amounts until distributed to such Holders. No
interest shall accrue or be payable to any Certificateholder on any amount held
in the escrow account or by the Master Servicer or the Depositor, as applicable,
as a result of such Certificateholder's failure to surrender its Certificate(s)
for payment in accordance with this Section 5.06. Any Certificate that is not
surrendered on the Distribution Date on which a purchase pursuant to this
Section 5.06 occurs as provided above will be deemed to have been purchased and
the Holder as of such date will have no rights with respect thereto except to
receive the purchase price therefor minus any costs and expenses associated with
such escrow account and notices allocated thereto. Any Certificates so purchased
or deemed to have been purchased on such Distribution Date shall remain
outstanding hereunder. The Master Servicer or the Depositor, as applicable,
shall be for all purposes the Holder thereof as of such date subject to any
rights of the Insurer hereunder with respect thereto.
SECTION 5.07. BASIS RISK RESERVE FUND.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Class A-II Certificateholders, the
Class A-II Basis Risk Reserve Fund (the "Basis Risk Reserve Fund"). The Basis
Risk Reserve Fund shall be an Eligible Account, and funds on deposit therein
shall be held separate and apart from, and shall not be commingled with, any
other moneys, including without limitation, other moneys held by the Trustee
pursuant to this Agreement. The Basis Risk Reserve Fund shall be treated as an
"outside reserve fund" under applicable Treasury regulations and will not be
part of any REMIC. Distributions made to any outside reserve fund under this
document shall be treated as made to, and any investment earnings on the Basis
Risk Reserve Fund will be treated as owned by, the Class SB-I and Class SB-II
Certificateholders (in the same proportions as amounts have been contributed to
such Funds under Sections 4.02(d)(i) and 4.02(d)(ii), respectively).
(b) On each Distribution Date, the Trustee shall deposit amounts
from the Loan Group I and Group II Excess Cashflow to the Basis Risk Reserve
Fund pursuant to Section 4.02(d)(i) and (ii). The amount required to be
deposited into the Basis Risk Reserve Fund on the first Distribution Date will
equal the Initial Class A-II Basis Risk Reserve Deposit and on any other
Distribution Date will be an amount (the "Basis Risk Fund Deposit") equal to any
Class A-II Basis Risk Shortfall for such Distribution Date and Class A-II Basis
Risk Shortfalls remaining unpaid with respect to prior Distribution Dates,
together with interest thereon at the then applicable Pass-Through Rate for the
Class A-II Certificates, as well as an amount such that when added to amounts
remaining on deposit in the Basis Risk Reserve Fund after distributions
therefrom on such Distribution Date, the aggregate amount on deposit in the
Basis Risk Reserve Fund is equal to $10,000. The Trustee shall make withdrawals
from the Basis Risk Reserve Fund to make distributions pursuant to Section
4.02(d)(i) and (ii) hereof.
(c) Funds in the Basis Risk Reserve Fund may be invested in
Permitted Investments. Any earnings on such amounts shall be payable to the
Class SB-I and Class SB-II Certificates (in the same proportions as amounts have
been contributed to such Funds under Sections 4.02(d)(i) and 4.02(d)(ii),
respectively). The Class SB-I and Class SB-II Certificates shall evidence
ownership of the Class A-II Basis Risk Reserve Fund for federal tax purposes as
described in (a) above and shall direct the Trustee in writing as to the
investment of amounts therein.
(d) Upon termination of the Trust, any amounts remaining in the
Class A-II Basis Risk Reserve Fund shall be distributed to the
Certificateholders of the Class SB-I and Class SB-II Certificates (in the same
proportions as amounts have been contributed to such Funds under Sections
4.02(d)(i) and 4.02(d)(ii), respectively).
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. RESPECTIVE LIABILITIES OF THE DEPOSITOR AND THE
MASTER SERVICER
The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and the Master
Servicer herein. By way of illustration and not limitation, the Depositor is not
liable for the servicing and administration of the Mortgage Loans, nor is it
obligated by Section 3.21, 7.01 or 10.01 to assume any obligations of the Master
Servicer or to appoint a designee to assume such obligations, nor is it liable
for any other obligation hereunder that it may, but is not obligated to, assume
unless it elects to assume such obligation in accordance herewith.
SECTION 6.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE
MASTER SERVICER; ASSIGNMENT OF RIGHTS AND DELEGATION OF DUTIES BY
MASTER SERVICER
(a) The Depositor and the Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation under the laws of
the state of its incorporation, and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or the Master Servicer may
be merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the CONTRARY
NOTWITHSTANDING; PROVIDED, HOWEVER, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
FNMA or FHLMC; and provided further that each Rating Agency's ratings, if any,
of the Class A Certificates without taking into account the related Policy in
effect immediately prior to such merger or consolidation will not be qualified,
reduced or withdrawn as a result thereof (as evidenced by a letter to such
effect from each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and Section
6.04 to the contrary, the Master Servicer may assign its rights and delegate its
duties and obligations under this Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is reasonably satisfactory to the
Trustee, the Insurer and the Depositor, is willing to service the Mortgage Loans
and executes and delivers to the Depositor, the Insurer and the Trustee an
agreement, in form and substance reasonably satisfactory to the Depositor, the
Insurer and the Trustee, which contains an assumption by such Person of the due
and punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer under this Agreement; provided
further that each Rating Agency's rating of the Classes of Certificates that
have been rated in effect immediately prior to such assignment and delegation
will not be qualified, reduced or withdrawn as a result of such assignment and
delegation (as evidenced by a letter to such effect from each Rating Agency),
without taking into account the related Policy. In the case of any such
assignment and delegation, the Master Servicer shall be released from its
obligations under this Agreement, except that the Master Servicer shall remain
liable for all liabilities and obligations incurred by it as Master Servicer
hereunder prior to the satisfaction of the conditions to such assignment and
delegation set forth in the next preceding sentence.
SECTION 6.03. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE
MASTER SERVICER AND OTHERS.
Neither the Depositor, the Master Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; PROVIDED, HOWEVER, that this
provision shall not protect the Depositor, the Master Servicer or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
Neither the Depositor nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal or administrative action,
proceeding, hearing or examination that is not incidental to its respective
duties under this Agreement and which IN ITS OPINION MAY INVOLVE IT IN ANY
EXPENSE OR LIABILITY; PROVIDED, HOWEVER, that the Depositor or the Master
Servicer may in its discretion undertake any such action, proceeding, hearing or
examination that it may deem necessary or desirable in respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action, proceeding, hearing or examination and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and the Master Servicer shall be entitled to be reimbursed therefor
out of amounts attributable to the Mortgage Loans on deposit in the Custodial
Account as provided by Section 3.10 and, on the Distribution Date(s) following
such reimbursement, the aggregate of such expenses and costs shall be allocated
in reduction of the Accrued Certificate Interest on each Class entitled thereto
in the same manner as if such expenses and costs constituted a Prepayment
Interest Shortfall.
SECTION 6.04. DEPOSITOR AND MASTER SERVICER NOT TO RESIGN
Subject to the provisions of Section 6.02, neither the Depositor nor
the Master Servicer shall resign from its respective obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination permitting the
resignation of the Depositor or the Master Servicer shall be evidenced by an
Opinion of Counsel (at the expense of the resigning party) to such effect
delivered to the Trustee and the Insurer. No such resignation by the Master
Servicer shall become effective until the Trustee or a successor servicer
reasonably acceptable to the Insurer shall have assumed the Master Servicer's
responsibilities and obligations in accordance with Section 7.02.
ARTICLE VII
DEFAULT
SECTION 7.01. EVENTS OF DEFAULT.
Event of Default, wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(i) the Master Servicer shall fail to distribute or cause to be
distributed to Holders of Certificates of any Class any distribution required to
be made under the terms of the Certificates of such Class and this Agreement
and, in either case, such failure shall continue unremedied for a period of 5
days after the date upon which written notice of such failure, requiring such
failure to be remedied, shall have been given to the Master Servicer by the
Trustee, the Insurer or the Depositor or to the Master Servicer, the Depositor
and the Trustee by the Holders of Certificates of such Class evidencing
Percentage Interests aggregating not less than 25%; or
(ii) the Master Servicer shall fail to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Master Servicer contained in the Certificates of any Class or in this Agreement
and such failure shall continue unremedied for a period of 30 days (except that
such number of days shall be 15 in the case of a failure to pay the premium for
any Required Insurance Policy) after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the Master
Servicer by the Trustee, the Insurer or the Depositor, or to the Master
Servicer, the Depositor and the Trustee by the Holders of Certificates of any
Class evidencing, as to such Class, Percentage Interests aggregating not less
than 25%; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law or
appointing a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings of, or relating
to, the Master Servicer or of, or relating to, all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of, or
commence a voluntary case under, any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or
(vi) the Master Servicer shall notify the Trustee pursuant to
Section 4.04(b) that it is unable to deposit in the Certificate Account an
amount equal to the Advance.
If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee shall
at the direction of the Insurer (unless an Insurer Default is continuing) or at
the direction of Holders of Certificates entitled to at least 51% of the Voting
Rights (which Voting Rights of the Class A Certificateholders may be exercised
by the Insurer without the consent of such Holders and may only be exercised by
such Holders with the prior written consent of the Insurer so long as there does
not exist a failure by the Insurer to make a required payment under the related
Policy), by notice in writing to the Master Servicer (and to the Depositor and
the Insurer if given by the Trustee or to the Trustee and the Insurer if given
by the Depositor), terminate all of the rights and obligations of the Master
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, other than ITS RIGHTS AS A CERTIFICATEHOLDER HEREUNDER; PROVIDED,
HOWEVER, that unless an Insurer Default is continuing the successor to the
Master Servicer appointed pursuant to Section 7.02 shall be acceptable to the
Insurer and shall have accepted the duties of Master Servicer effective upon the
resignation of the Master Servicer. If an Event of Default described in clause
(vi) hereof shall occur, the Trustee with the consent of the Insurer shall, by
notice to the Master Servicer, the Depositor and the Insurer, immediately
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, other than
its rights as a Certificateholder hereunder as provided in Section 4.04(b). On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Certificates (other than as a Holder thereof) or the Mortgage
Loans or otherwise, shall subject to Section 7.02 pass to and be vested in the
Trustee or the Trustee's designee appointed pursuant to Section 7.02; and,
without limitation, the Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee or its designee for administration by it of all cash
amounts which shall at the time be credited to the Custodial Account or the
Certificate Account or thereafter be received with respect to the Mortgage
Loans. No such termination shall release the Master Servicer for any liability
that it would otherwise have hereunder for any act or omission prior to the
effective time of such termination.
Notwithstanding any termination of the activities of Residential
Funding in its capacity as Master Servicer hereunder, Residential Funding shall
be entitled to receive, out of any late collection of a Monthly Payment on a
Mortgage Loan which was due prior to the notice terminating Residential
Funding's rights and obligations as Master Servicer hereunder and received after
such notice, that portion to which Residential Funding would have been entitled
pursuant to Sections 3.10(a)(ii), (vi) and (vii) as well as its Servicing Fee in
respect thereof, and any other amounts payable to Residential Funding hereunder
the entitlement to which arose prior to the termination of its activities
hereunder. Upon the termination of Residential Funding as Master Servicer
hereunder the Depositor shall deliver to the Trustee a copy of the Program Guide
and upon request of the Insurer, a copy of the Program Guide to the Insurer.
SECTION 7.02. TRUSTEE OR DEPOSITOR TO ACT; APPOINTMENT OF
SUCCESSOR.
(a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section 6.04,
the Insurer may appoint a successor Master Servicer and if the Insurer fails to
do so within 30 days, the Trustee or, upon notice to the Insurer and the
Depositor and with the Depositor's and the Insurer's consent (which shall not be
unreasonably withheld) a designee (which meets the standards set forth below) of
the Trustee, shall be the successor in all respects to the Master Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer (except for the
responsibilities, duties and liabilities contained in Sections 2.02 and 2.03(a),
excluding the duty to notify related Subservicers or Sellers as set forth in
such Sections, and its obligations to deposit amounts in respect of losses
incurred prior to such notice or termination on the investment of funds in the
Custodial Account or the Certificate Account pursuant to Sections 3.07(c) and
4.01(c) by the terms and provisions HEREOF); PROVIDED, HOWEVER, that any failure
to perform such duties or responsibilities caused by the preceding Master
Servicer's failure to provide information required by Section 4.04 shall not be
considered a default by the Trustee hereunder. As compensation therefor, the
Trustee shall be entitled to all funds relating to the Mortgage Loans which the
Master Servicer would have been entitled to charge to the Custodial Account or
the Certificate Account if the Master Servicer had continued to act hereunder
and, in addition, shall be entitled to the income from any Permitted Investments
made with amounts attributable to the Mortgage Loans held in the Custodial
Account or the Certificate Account. If the Trustee has become the successor to
the Master Servicer in accordance with Section 6.04 or Section 7.01, then
notwithstanding the above, the Insurer may appoint a successor Master Servicer
and if the Insurer fails to do so within 30 days, the Trustee may, if it shall
be unwilling to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, which is also a FNMA- or FHLMC-approved mortgage
servicing institution, having a net worth of not less than $10,000,000 as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall become successor to the Master Servicer and shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such SUCCESSOR OUT OF
PAYMENTS ON MORTGAGE LOANS AS IT AND SUCH SUCCESSOR SHALL AGREE; PROVIDED,
HOWEVER, that no such compensation shall be in excess of that permitted the
initial Master Servicer hereunder. The Depositor, the Trustee, the Custodian and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. The Servicing Fee for any
successor Master Servicer appointed pursuant to this Section 7.02 will be
lowered with respect to those Mortgage Loans, if any, where the Subservicing Fee
accrues at a rate of less than 0.50% per annum in the event that the successor
Master Servicer is not servicing such Mortgage Loans directly and it is
necessary to raise the related Subservicing Fee to a rate of 0.50% per annum in
order to hire a Subservicer with respect to such Mortgage Loans.
(b) In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the
Trustee if the Trustee is acting as successor Master Servicer, shall represent
and warrant that it is a member of MERS in good standing and shall agree to
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS, in which case the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to revise its records to reflect the
transfer of servicing to the successor Master Servicer as necessary under MERS'
rules and regulations, or (ii) the predecessor Master Servicer shall cooperate
with the successor Master Servicer in causing MERS to execute and deliver an
assignment of Mortgage in recordable form to transfer the Mortgage from MERS to
the Trustee and to execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such
Mortgage Loan or servicing of such Mortgage Loan on the MERS(R) System to the
successor Master Servicer. The predecessor Master Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
predecessor Master Servicer shall bear any and all fees of MERS, costs of
preparing any assignments of Mortgage, and fees and costs of filing any
assignments of Mortgage that may be required under this subsection (b). The
successor Master Servicer shall cause such assignment to be delivered to the
Trustee or the Custodian promptly upon receipt of the original with evidence of
recording thereon or a copy certified by the public recording office in which
such assignment was recorded.
SECTION 7.03. NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any such termination or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and the Insurer.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates and the Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived as provided in Section 7.04
hereof.
SECTION 7.04. WAIVER OF EVENTS OF DEFAULT.
The Insurer or the Holders representing at least 66% of the Voting
Rights of Certificates affected by a default or Event of Default hereunder may
waive any default or Event of Default, with the written consent of the Insurer,
which consent shall not be UNREASONABLY WITHHELD; PROVIDED, HOWEVER, that (a) a
default or Event of Default under clause (i) of Section 7.01 may be waived, with
the written consent of the Insurer, only by all of the Holders of Certificates
affected by such default or Event of Default (which Voting Rights of the Class A
Certificateholders may be exercised by the Insurer without the consent of such
Holders and may only be exercised by such Holders with the prior written consent
of the Insurer so long as there does not exist a failure by the Insurer to make
a required payment under the related Policy) and (b) no waiver pursuant to this
Section 7.04 shall affect the Holders of Certificates in the manner set forth in
Section 11.01(b)(i), (ii) or (iii). Upon any such waiver of a default or Event
of Default by the Insurer or the Holders representing the requisite percentage
of Voting Rights of Certificates affected by such default or Event of Default
with the consent of the Insurer, which consent shall not be unreasonably
withheld, such default or Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon except to the extent expressly so waived.
SECTION 7.05. TRIGGER EVENTS; REMOVAL OF MASTER SERVICER.
(a) Upon determination by the Insurer that a Trigger Event has
occurred, the Insurer shall give notice of such Trigger Event to the Master
Servicer, the Depositor, the Trustee and to each Rating Agency.
(b) At any time after such determination and while a Trigger Event
is continuing, the Insurer may direct the Trustee to remove the Master Servicer
if the Insurer makes a determination that the manner of master servicing was a
factor contributing to the size of the delinquencies or losses incurred in the
Trust Fund.
(c) Upon receipt of directions to remove the Master Servicer
pursuant to the preceding clause (b), the Trustee shall notify the Master
Servicer that it has been terminated and the Master Servicer shall be terminated
in the same manner as specified in Sections 7.01 and 7.02.
(d) After notice of occurrence of a Trigger Event has been given and
while a Trigger Event is continuing, until and unless the Master Servicer has
been removed as provided in clause (b), the Master Servicer covenants and agrees
to act as the Master Servicer for a term from the occurrence of the Trigger
Event to the end of the calendar quarter in which such Trigger Event occurs,
which term may at the Insurer's discretion be extended by notice to the Trustee
for successive terms of three (3) calendar months each, until the termination of
the Trust Fund. The Master Servicer will, upon the receipt of each such notice
of extension (a "Master Servicer Extension Notice") become bound for the
duration of the term covered by such Master Servicer Extension Notice to
continue as Master Servicer subject to and in accordance with this Agreement.
If, as of the fifteenth (15th) day prior to the last day of any term as the
Master Servicer, the Trustee shall not have received any Master Servicer
Extension Notice from the Insurer, the Trustee shall, within five (5) days
thereafter, give written notice of such nonreceipt to the Insurer and the Master
Servicer. If any such term expires without a Master Servicer Extension Notice
then the Trustee shall act as Master Servicer as provided in Section 7.02.
(e) No provision of this Section 7.05 shall have the effect of
limiting the rights of the Depositor, the Trustee, the Certificateholders or the
Insurer under Section 7.01.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent investor would exercise or use under the circumstances in the
conduct of such investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. The Trustee shall notify the
Insurer and the Certificateholders of any such documents which do not materially
conform to the requirements of this Agreement in the event that the Trustee,
after so requesting, does not receive satisfactorily corrected documents.
The Trustee shall forward or cause to be forwarded in a timely
fashion the notices, reports and statements required to be forwarded by the
Trustee pursuant to Sections 4.03, 4.06, 7.03, and 10.01. The Trustee shall
furnish in a timely fashion to the Master Servicer such information as the
Master Servicer may reasonably request from time to time for the Master Servicer
to fulfill its duties as set forth in this Agreement and the Trustee shall
furnish in a timely fashion to the Insurer such information as the Insurer may
reasonably request from time to time for the Insurer to protect its interests
and to fulfill its duties as set forth in the related Policy. The Trustee
covenants and agrees that it shall perform its obligations hereunder in a manner
so as to maintain the status of each REMIC as a REMIC under the REMIC Provisions
and (subject to Section 10.01(f)) to prevent the imposition of any federal,
state or local income, prohibited transaction, contribution or other tax on any
REMIC to the extent that maintaining such status and avoiding such taxes are
reasonably within the control of the Trustee and are reasonably within the scope
of its duties under this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own WILLFUL MISCONDUCT; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee by the Depositor or the Master Servicer and which
on their face, do not contradict the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Insurer or the Certificateholders
holding Certificates which evidence, Percentage Interests aggregating not
less than 25% of the affected classes as to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
(iv) The Trustee shall not be charged with knowledge of any
default (other than a default in payment to the Trustee) specified in
clauses (i) and (ii) of Section 7.01 or an Event of Default under clauses
(iii), (iv) and (v) of Section 7.01 unless a Responsible Officer of the
Trustee assigned to and working in the Corporate Trust Office obtains
actual knowledge of such failure or event or the Trustee receives written
notice of such failure or event at its Corporate Trust Office from the
Master Servicer, the Insurer, the Depositor or any Certificateholder; and
(v) Except to the extent provided in Section 7.02, no
provision in this Agreement shall require the Trustee to expend or risk
its own funds (including, without limitation, the making of any Advance)
or otherwise incur any personal financial liability in the performance of
any of its duties as Trustee hereunder, or in the exercise of any of its
rights or powers, if the Trustee shall have reasonable grounds for
believing that repayment of funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount of
any and all federal, state and local taxes imposed on the Trust Fund or its
assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the Code, if, when and
as the same shall be due and payable, (B) any tax on contributions to a REMIC
after the Closing Date imposed by Section 860G(d) of the Code and (C) any tax on
"net income from foreclosure property" as defined in Section 860G(c) of the
Code, but only if such taxes arise out of a breach by the Trustee of its
obligations hereunder, which breach constitutes negligence or willful misconduct
of the Trustee.
(e) No provision in this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any personal financial liability
in connection with the enforcement of the Policies, or in the exercise of any of
its rights or powers thereunder, if the Trustee shall have reasonable grounds
for believing that repayment of funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders or the
Insurer, pursuant to the provisions of this Agreement, unless such
Certificateholders or the Insurer shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby and the Insurer has
given its consent; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent investor would exercise or use under
the circumstances in the conduct of such investor's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing so to do by the Insurer or
the Holders of Certificates of any Class evidencing, as to such Class,
Percentage Interests, aggregating not less than 50% with the written
consent of the INSURER; PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such expense or liability as a
condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer, if an Event of Default
shall have occurred and is continuing, and otherwise by the
Certificateholder or the Insurer requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys provided that the Trustee shall remain liable for any
acts of such agents or attorneys; and
(vii) To the extent authorized under the Code and the
regulations promulgated thereunder, each Holder of a Class R Certificate
hereby irrevocably appoints and authorizes the Trustee to be its
attorney-in-fact for purposes of signing any Tax Returns required to be
filed on behalf of the Trust Fund. The Trustee shall sign on behalf of the
Trust Fund and deliver to the Master Servicer in a timely manner any Tax
Returns prepared by or on behalf of the Master Servicer that the Trustee
is required to sign as determined by the Master Servicer pursuant to
applicable federal, state or local tax laws, provided that the Master
Servicer shall indemnify the Trustee for signing any such Tax Returns that
contain errors or omissions.
(b) Following the issuance of the Certificates, the Trustee shall
not accept any contribution of assets to the Trust Fund unless it (subject to
Section 10.01(f)) shall have obtained or been furnished with an Opinion of
Counsel to the effect that such contribution will not (i) cause any REMIC formed
hereunder to fail to qualify as a REMIC at any time that any Certificates are
outstanding or (ii) cause the Trust Fund to be subject to any federal tax as a
result of such contribution (including the imposition of any federal tax on
"prohibited transactions" imposed under Section 860F(a) of the Code).
SECTION 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE
LOANS.
The recitals contained herein and in the Certificates (other than
the execution of the Certificates and relating to the acceptance and receipt of
the Mortgage Loans) shall be taken as the statements of the Depositor or the
Master Servicer as the case may be, and the Trustee assumes no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document, or of MERS
or MERS(R) System. Except as otherwise provided herein, the Trustee shall not be
accountable for the use or application by the Depositor or the Master Servicer
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Depositor or the Master Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Custodial
Account or the Certificate Account by the Depositor or the Master Servicer.
SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee.
SECTION 8.05. MASTER SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES;
INDEMNIFICATION.
(a) The Master Servicer covenants and agrees to pay to the Trustee
and any co-trustee from time to time, and the Trustee and any co-trustee shall
be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by each of them in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee and any co-trustee, and the Master Servicer will pay or
reimburse the Trustee and any co-trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee or any
co-trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by the
Trustee or any co-trustee in connection with the appointment of an office or
agency pursuant to Section 8.12) except any such expense, disbursement or
advance as may arise from its negligence or bad faith.
(b) The Master Servicer agrees to indemnify the Trustee for, and to
hold the Trustee harmless against, any loss, liability or expense incurred
without negligence or willful misconduct on its part, arising out of, or in
connection with, the acceptance and administration of the Trust Fund, including
the costs and expenses (including reasonable legal fees and expenses) of
defending itself against any claim in connection with the exercise or
performance of any of its powers or duties under this Agreement, provided that:
(i) with respect to any such claim, the Trustee shall have
given the Master Servicer written notice thereof promptly after the
Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the
Trustee shall cooperate and consult fully with the Master Servicer in
preparing such defense; and
(iii) notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not be liable for settlement of any
claim by the Trustee entered into without the prior consent of the Master
Servicer which consent shall not be unreasonably withheld.
No termination of this Agreement shall affect the obligations
created by this Section 8.05(b) of the Master Servicer to indemnify the Trustee
under the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicer in this Section 8.05(b) shall not pertain to any loss, liability
or expense of the Trustee, including the costs and expenses of defending itself
against any claim, incurred in connection with any actions taken by the Trustee
at the direction of Certificateholders pursuant to the terms of this Agreement.
SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a national banking
association or a New York banking corporation having its principal office in a
state and city acceptable to the Depositor and the Insurer and organized and
doing business under the laws of such state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation or national
banking association publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 8.07.
SECTION 8.07. RESIGNATION AND REMOVAL OF THE TRUSTEE.
(a) The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor and the
Insurer. Upon receiving such notice of resignation, the Depositor shall promptly
appoint a successor trustee acceptable to the Insurer by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, then the Insurer may appoint a successor
trustee and if the Insurer fails to do so within 30 days, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Insurer or the Depositor with the consent of the
Insurer, which consent shall not be unreasonably withheld, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Insurer or the Depositor with the consent of the Insurer,
which consent shall not be unreasonably withheld, may remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee. In addition, in the event that the Insurer or the
Depositor determines that the Trustee has failed (i) to make a claim available
under the related Policy or failed to distribute or cause to be distributed to
Certificateholders any amount required to be distributed hereunder (including
any Insured Amount), if such amount is held by the Trustee or its Paying Agent
(other than the Master Servicer or the Depositor) for distribution or (ii) to
otherwise observe or perform in any material respect any of its covenants,
agreements or obligations hereunder, and such failure shall continue unremedied
for a period of 5 days (in respect of clause (i) above) or 30 days (in respect
of clause (ii) above) after the date on which written notice of such failure,
requiring that the same be remedied, shall have been given to the Trustee by the
Depositor or the Insurer, then the Insurer or the Depositor with the consent of
the Insurer, which consent shall not be unreasonably withheld, may remove the
Trustee and appoint a successor trustee by written instrument delivered as
provided in the preceding sentence. In connection with the appointment of a
successor trustee pursuant to the preceding sentence, the Depositor shall, on or
before the date on which any such appointment becomes effective, obtain from
each Rating Agency written confirmation that the appointment of any such
successor trustee will not result in the reduction of the ratings on any class
of the Certificates below the lesser of the then current or original ratings on
such Certificates, without taking into account the related Policy.
(c) During the continuance of an Insurer Default, the Holders of
Certificates entitled to at least 51% of the Voting Rights may at any time
remove the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08.
SECTION 8.08. SUCCESSOR TRUSTEE.
(a) Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and the Insurer and to
its predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder (other than any
Mortgage Files at the time held by a Custodian, which shall become the agent of
any successor trustee hereunder), and the Depositor, the Master Servicer and the
predecessor trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.09. MERGER OR CONSOLIDATION OF TRUSTEE
Any corporation or national banking association into which the
Trustee may be merged or converted or with which it may be consolidated or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall mail notice of any such merger or
consolidation to the Certificateholders at their address as shown in the
Certificate Register.
SECTION 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE
(a) Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be located,
the Master Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity, such title
to the Trust Fund, or any part thereof, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee, and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute
the Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. APPOINTMENT OF CUSTODIANS.
The Trustee may, with the consent of the Master Servicer, the
Insurer and the Depositor, appoint one or more Custodians who are not Affiliates
of the Depositor, the Master Servicer or any Seller to hold all or a portion of
the Mortgage Files as agent for the Trustee, by entering into a Custodial
Agreement. Subject to Article VIII, the Trustee agrees to comply with the terms
of each Custodial Agreement and to enforce the terms and provisions thereof
against the Custodian for the benefit of the Certificateholders. Each Custodian
shall be a depository institution subject to supervision by federal or state
authority, shall have a combined capital and surplus of at least $15,000,000 and
shall be qualified to do business in the jurisdiction in which it holds any
Mortgage File. Each Custodial Agreement may be amended only as provided in
Section 11.01. The Trustee shall notify the Certificateholders of the
appointment of any Custodian (other than the Custodian appointed as of the
Closing Date) pursuant to this Section 8.11.
SECTION 8.12. APPOINTMENT OF OFFICE OR AGENCY.
The Trustee will maintain an office or agency in the City of New
York where Certificates may be surrendered for registration of transfer or
exchange. The Trustee initially designates its offices located at 14 Wall
Street, 8th Floor, New York, New York 10005 for the purpose of keeping the
Certificate Register. The Trustee will maintain an office at the address stated
in Section 11.05(c) hereof where notices and demands to or upon the Trustee in
respect of this Agreement may be served.
ARTICLE IX
TERMINATION
SECTION 9.01. TERMINATION UPON PURCHASE BY THE MASTER SERVICER OR
THE DEPOSITOR OR LIQUIDATION OF ALL MORTGAGE LOANS.
(a) Subject to Section 9.03, the respective obligations and
responsibilities of the Depositor, the Master Servicer and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to Certificateholders
and the obligation of the Depositor to send certain notices as hereinafter set
forth) shall terminate upon the last action required to be taken by the Trustee
on the Final Distribution Date pursuant to this Article IX following the earlier
of:
(i) the later of the final payment or other liquidation (or
any Advance with respect thereto) of the last Mortgage Loan remaining in
any REMIC formed hereunder or the disposition of all property acquired
upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan in
the applicable REMIC, or
(ii) the purchase by the Master Servicer or the Depositor of
all Mortgage Loans and all property acquired in respect of any Mortgage
Loan remaining in the applicable REMIC (other than the Policies) at a
price equal to 100% of the unpaid principal balance of each Mortgage Loan
(or, if less than such unpaid principal balance, the fair market value of
the related underlying property of such Mortgage Loan with respect to
Mortgage Loans as to which title has been acquired if such fair market
value is less than such unpaid principal balance) (net of any unreimbursed
Advances attributable to principal) on the day of repurchase, plus accrued
interest thereon at the Net Mortgage Rate (or Modified Net Mortgage Rate
in the case of any Modified Mortgage Loan) plus the Policy Premium Rate
to, but not including, the first day of the month in which such repurchase
price is distributed, plus the sum of (A) any Group I Prepayment Interest
Shortfalls and Group II Prepayment Interest Shortfalls, as applicable,
remaining unpaid from prior Distribution Dates, together with interest
thereon at the related Pass-Through Rate for such Class of Class A
Certificates to which such Group I Prepayment Interest Shortfalls or Group
II Prepayment Interest Shortfalls, as applicable, were allocated (as
adjusted from time to time, with respect to the Class A-II Certificates)
until such Group I Prepayment Interest Shortfalls or Group II Prepayment
Interest Shortfalls, have been paid in FULL AND (B) ANY AMOUNTS DUE TO THE
INSURER UNDER THE INSURANCE AGREEMENT; PROVIDED, HOWEVER, that in no event
shall the trust created hereby continue beyond the expiration of 21 years
from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St.
James, living on the date hereof and provided further that the purchase
price set forth above shall be increased as is necessary, as determined by
the Master Servicer, to avoid disqualification of any of the REMICs formed
hereunder as a REMIC.
The right of the Master Servicer or the Depositor to purchase all
the assets remaining in the REMIC relating to the Group I Loans or Group II
Loans, as applicable, pursuant to clause (ii) above is conditioned upon the
occurrence of the Loan Group I Optional Termination Date or Loan Group II
Optional Termination Date, as applicable. If such right is exercised by the
Master Servicer, the Master Servicer shall be deemed to have been reimbursed for
the full amount of any unreimbursed Advances theretofore made by it with respect
to the Mortgage Loans. In addition, the Master Servicer or the Depositor, as
applicable, shall provide to the Trustee the certification required by Section
3.15 and the Trustee and any Custodian shall, promptly following payment of the
purchase price, release to the Master Servicer or the Depositor, as applicable,
the Mortgage Files pertaining to the Mortgage Loans being purchased. No purchase
pursuant to clause (ii) of this Section 9.01(a) is permitted if it would result
in a draw on the related Policy unless the Insurer consents in writing.
(b) The Master Servicer or, in the case of a final distribution as a
result of the exercise by the Depositor of its right to purchase the assets of
the Trust Fund, the Depositor, shall give the Trustee and the Insurer not less
than 60 days' prior notice of the Distribution Date on which the Master Servicer
or the Depositor, as applicable, anticipates that the final distribution will be
made to Certificateholders (whether as a result of the exercise by the Master
Servicer or the Depositor of its right to purchase the assets of the Trust Fund
or otherwise). Notice of any termination, specifying the anticipated Final
Distribution Date (which shall be a date that would otherwise be a Distribution
Date) upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and cancellation, shall be given
promptly by the Master Servicer or the Depositor, as applicable (if it is
exercising its right to purchase the assets of the Trust Fund), or by the
Trustee (in any other case) by letter to Certificateholders mailed not earlier
than the 15th day and not later than the 25th day of the month next preceding
the month of such final distribution specifying:
(i) the anticipated Final Distribution Date upon which final
payment of the Certificates is anticipated to be made upon presentation
and surrender of Certificates at the office or agency of the Trustee
therein designated,
(ii) the amount of any such final payment, if known, and
(iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, and that payment will be made only
upon presentation and surrender of the Certificates at the office or
agency of the Trustee therein specified.
If the Master Servicer or the Depositor, as applicable, is obligated to give
notice to Certificateholders as aforesaid, it shall give such notice to the
Certificate Registrar at the time such notice is given to Certificateholders. In
the event such notice is given by the Master Servicer or the Depositor, the
Master Servicer or the Depositor, as applicable, shall deposit in the
Certificate Account before the Final Distribution Date in immediately available
funds an amount equal to the purchase price for the assets of the Trust Fund
computed as above provided.
(c) Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall distribute to the Certificateholders and
to the Insurer (i) the amount otherwise distributable on such Distribution Date,
if not in connection with the Master Servicer's or the Depositor's election to
repurchase, or (ii) if the Master Servicer or the Depositor elected to so
repurchase, an amount determined as follows: (A) with respect to each related
Class of Class A Certificates the outstanding Certificate Principal Balance
thereof, plus Accrued Certificate Interest thereon for the related Interest
Accrual Period and any previously unpaid Accrued Certificate Interest, including
any Group I Prepayment Interest Shortfalls or Group II Prepayment Interest
Shortfalls, as applicable, remaining unpaid on the preceding Distribution Date,
together with interest thereon at the related Pass-Through Rate for such
Certificates to which such Group I Prepayment Interest Shortfalls or Group II
Prepayment Interest Shortfalls, as applicable, were allocated (as adjusted from
time to time, with respect to the Class A-II Certificates) until such Group I
Prepayment Interest Shortfalls or Group II Prepayment Interest Shortfalls have
been paid in full, subject to the priority set forth in Section 4.02(d), and (B)
with respect to the Class SB Certificates, any excess of the amounts available
for distribution (including the repurchase price specified in clause (ii) of
subsection (a) of this Section) over the total amount distributed under the
immediately preceding clause (A) in accordance with the priorities of Section
4.02 (c) and (d) and (C) with respect to the Insurer, any amounts owed to it
pursuant to the Insurance Agreement.
(d) In the event that any Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Distribution Date, the Trustee shall on such date cause all funds in the
Certificate Account not distributed in final distribution to Certificateholders
to be withdrawn therefrom and credited to the remaining Certificateholders by
depositing such funds in a separate escrow account for the benefit of such
Certificateholders, and the Master Servicer or the Depositor, as applicable (if
it exercised its right to purchase the assets of the Trust Fund), or the Trustee
(in any other case) shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within six months after the
second notice any Certificate shall not have been surrendered for cancellation,
the Trustee shall take appropriate steps as directed by the Master Servicer or
the Depositor, as applicable, to contact the remaining Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the escrow account and of contacting Certificateholders shall be
paid out of the assets which remain in the escrow account. If within nine months
after the second notice any Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to the Master Servicer or the Depositor, as
applicable, all amounts distributable to the holders thereof and the Master
Servicer or the Depositor, as applicable, shall thereafter hold such amounts
until distributed to such holders. No interest shall accrue or be payable to any
Certificateholder on any amount held in the escrow account or by the Master
Servicer or the Depositor, as applicable, as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 9.01 and the Certificateholders shall
look only to the Master Servicer for such payment.
SECTION 9.02. TERMINATION OF REMIC III.
REMIC III shall be terminated on the earlier of the Final
Distribution Date and the date on which it is deemed to receive the last deemed
distributions on the REMIC I Regular Interests and the REMIC II Regular
Interests and the last distribution due on the Class A-I, Class A-II, Class SB
and Class R-III Certificates is made.
SECTION 9.03. ADDITIONAL TERMINATION REQUIREMENTS.
(a) Each REMIC formed hereunder shall be terminated in accordance
with the following additional requirements, unless (subject to Section 10.01(f))
the Trustee and the Master Servicer have received an Opinion of Counsel (which
Opinion of Counsel shall not be an expense of the Trustee or the Insurer) to the
effect that the failure of any of the REMICs formed hereunder to comply with the
requirements of this Section 9.03 will not (i) result in the imposition on any
such REMIC of taxes on "prohibited transactions," as described in Section 860F
of the Code, or (ii) any REMIC formed hereunder to fail to qualify as a REMIC at
any time that any Certificate is outstanding:
(i) The Master Servicer shall establish a 90-day liquidation
period for REMIC I, REMIC II and REMIC III, as the case may be, and
specify the first day of such period in a statement attached to the Trust
Fund's final Tax Return pursuant to Treasury regulations Section 1.860F-1.
The Master Servicer also shall satisfy all of the requirements of a
qualified liquidation for REMIC I, REMIC II and REMIC III, as the case may
be, under Section 860F of the Code and the regulations thereunder;
(ii) The Master Servicer shall notify the Trustee at the
commencement of such 90-day liquidation period and, at or prior to the
time of making of the final payment on the Certificates, the Trustee shall
sell or otherwise dispose of all of the remaining assets of the relevant
REMIC in accordance with the terms hereof; and
(iii) If the Master Servicer is exercising its right to
purchase the assets of the relevant REMIC, the Master Servicer shall,
during the 90-day liquidation period and at or prior to the Final
Distribution Date, purchase all of THE ASSETS OF SUCH REMIC FOR CASH;
PROVIDED, HOWEVER, that in the event that a calendar quarter ends after
the commencement of the 90-day liquidation period but prior to the Final
Distribution Date, the Master Servicer shall not purchase any of the
assets of the Trust Fund prior to the close of that calendar quarter.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Master Servicer as its attorney-in-fact to adopt a
plan of complete liquidation for REMIC I, REMIC II and REMIC III at the expense
of the Trust Fund in accordance with the terms and conditions of this Agreement.
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC ADMINISTRATION.
(a) The REMIC Administrator shall make an election to treat each
REMIC formed hereunder as a REMIC under the Code and, if necessary, under
applicable state law. Such election will be made on Form 1066 or other
appropriate federal tax or information return (including Form 8811) or any
appropriate state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. For the purposes of the
REMIC election in respect of REMIC I, the REMIC I Regular Interests shall be
designated as the "regular interests" and the Class R-I Certificates shall be
designated as the sole class of "residual interests" in the REMIC I. The REMIC
II Regular Interests shall be designated as the "regular interests" and the
Class R-II Certificates shall be designated as the sole class of "residual
interests" in REMIC II. The Class A-I, Class A-II and Class SB-I and Class SB-II
Certificates shall be designated as the "regular interests" in REMIC III and the
Class R-III Certificates shall be designated the sole class of "residual
interests" in REMIC III. The REMIC Administrator and the Trustee shall not
permit the creation of any "interests" (within the meaning of Section 860G of
the Code) in the REMIC other than the Certificates.
(b) The Closing Date is hereby designated as the "startup day" of
each REMIC formed hereunder within the meaning of Section 860G(a)(9) of the
Code.
(c) The REMIC Administrator shall hold a Class R Certificate in each
REMIC representing a 0.01% Percentage Interest of the Class R Certificates in
each REMIC formed hereunder and shall be designated as the "tax matters person"
with respect to each such REMIC in the manner provided under Treasury
regulations section 1.860F-4(d) and temporary Treasury regulations section
301.6231(a)(7)-1T. The REMIC Administrator, as tax matters person, shall (i) act
on behalf of each REMIC formed hereunder in relation to any tax matter or
controversy involving the Trust Fund and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The legal expenses,
including without limitation attorneys' or accountants' fees, and costs of any
such proceeding and any liability resulting therefrom shall be expenses of the
Trust Fund and the REMIC Administrator shall be entitled to reimbursement
therefor out of amounts attributable to the Mortgage Loans on deposit in the
Custodial Account as provided by Section 3.10 unless such legal expenses and
costs are incurred by reason of the REMIC Administrator's willful misfeasance,
bad faith or gross negligence. If the REMIC Administrator is no longer the
Master Servicer hereunder, at its option the REMIC Administrator may continue
its duties as REMIC Administrator and shall be paid reasonable compensation not
to exceed $3,000 per year by any successor Master Servicer hereunder for so
acting as the REMIC Administrator.
(d) The REMIC Administrator shall prepare or cause to be prepared
all of the Tax Returns that it determines are required with respect to each
REMIC created hereunder and deliver such Tax Returns in a timely manner to the
Trustee and the Trustee shall sign and file such Tax Returns in a timely manner.
The expenses of preparing such returns shall be borne by the REMIC Administrator
without any right of reimbursement therefor. The REMIC Administrator agrees to
indemnify and hold harmless the Trustee with respect to any tax or liability
arising from the Trustee's signing of Tax Returns that contain errors or
omissions. The Trustee and Master Servicer shall promptly provide the REMIC
Administrator with such information as the REMIC Administrator may from time to
time request for the purpose of enabling the REMIC Administrator to prepare Tax
Returns.
(e) The REMIC Administrator shall provide (i) to any Transferor of a
Class R Certificate such information as is necessary for the application of any
tax relating to the transfer of a Class R Certificate to any Person who is not a
Permitted Transferee, (ii) to the Trustee and the Trustee shall forward to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption) and
(iii) to the Internal Revenue Service the name, title, address and telephone
number of the person who will serve as the representative of each REMIC.
(f) The Master Servicer and the REMIC Administrator shall take such
actions and shall cause each REMIC created hereunder to take such actions as are
reasonably within the Master Servicer's or the REMIC Administrator's control and
the scope of its duties more specifically set forth herein as shall be necessary
or desirable to maintain the status thereof as a REMIC under the REMIC
Provisions (and the Trustee shall assist the Master Servicer and the REMIC
Administrator, to the extent reasonably requested by the Master Servicer and the
REMIC Administrator to do so). In performing their duties as more specifically
set forth herein, the Master Servicer and the REMIC Administrator shall not
knowingly or intentionally take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action reasonably
within their respective control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, could (i) endanger the status of any REMIC as a REMIC or (ii)
result in the imposition of a tax upon any REMIC (including but not limited to
the tax on prohibited transactions as defined in Section 860F(a)(2) of the Code
and the tax on contributions to a REMIC set forth in Section 860G(d) of the
Code) (either such event, in the absence of an Opinion of Counsel or the
indemnification referred to in this sentence, an "Adverse REMIC Event") unless
the Master Servicer or the REMIC Administrator, as applicable, has received an
Opinion of Counsel (at the expense of the party seeking to take such action or,
if such party fails to pay such expense, and the Master Servicer or the REMIC
Administrator, as applicable, determines that taking such action is in the best
interest of the Trust Fund and the Certificateholders and is not adverse to the
interests of the Insurer, at the expense of the Trust Fund, but in no event at
the expense of the Master Servicer, the REMIC Administrator or the Trustee) to
the effect that the contemplated action will not, with respect to each REMIC
created hereunder, endanger such status or, unless the Master Servicer or the
REMIC Administrator or both, as applicable, determine in its or their sole
discretion to indemnify the Trust Fund against the imposition of such a tax,
result in the imposition of such a tax. Wherever in this Agreement a
contemplated action may not be taken because the timing of such action might
result in the imposition of a tax on the Trust Fund, or may only be taken
pursuant to an Opinion of Counsel that such action would not impose a tax on the
Trust Fund, such action may nonetheless be taken provided that the indemnity
given in the preceding sentence with respect to any taxes that might be imposed
on the Trust Fund has been given and that all other preconditions to the taking
of such action have been satisfied. The Trustee shall not take or fail to take
any action (whether or not authorized hereunder) as to which the Master Servicer
or the REMIC Administrator, as applicable, has advised it in writing that it has
received an Opinion of Counsel to the effect that an Adverse REMIC Event could
occur with respect to such action. In addition, prior to taking any action with
respect to any REMIC or its assets, or causing any REMIC to take any action,
which is not expressly permitted under the terms of this Agreement, the Trustee
will consult with the Master Servicer or the REMIC Administrator, as applicable,
or its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any REMIC and the Trustee shall not
take any such action or cause any REMIC to take any such action as to which the
Master Servicer or the REMIC Administrator, as applicable, has advised it in
writing that an Adverse REMIC Event could occur. The Master Servicer or the
REMIC Administrator, as applicable, may consult with counsel to make such
written advice, and the cost of same shall be borne by the party seeking to take
the action not expressly permitted by this Agreement, but in no event at the
expense of the Master Servicer or the REMIC Administrator. At all times as may
be required by the Code, the Master Servicer or the REMIC Administrator, as
applicable, will to the extent within its control and the scope of its duties
more specifically set forth herein, maintain substantially all of the assets of
each REMIC as "qualified mortgages" as defined in Section 860G(a)(3) of the Code
and "permitted investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on "net income from foreclosure property" of any REMIC as defined in
Section 860G(c) of the Code, on any contributions to any REMIC after the startup
day therefor pursuant to Section 860G(d) of the Code, or any other tax imposed
by the Code or any applicable provisions of state or local tax laws, such tax
shall be charged (i) to the Master Servicer, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
this Agreement or the Master Servicer has in its sole discretion determined to
indemnify the Trust Fund against such tax, (ii) to the Trustee, if such tax
arises out of or results from a breach by the Trustee of any of its obligations
under this Article X, or (iii) otherwise against amounts on deposit in the
Custodial Account as provided by Section 3.10 and on the Distribution Date(s)
following such reimbursement the aggregate of such taxes shall be allocated in
reduction of the Accrued Certificate Interest on each Class entitled thereto in
the same manner as if such taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for federal income
tax purposes, maintain books and records with respect to each REMIC on a
calendar year and on an accrual basis or as otherwise may be required by the
REMIC Provisions.
(i) Following the Startup Date, neither the Master Servicer nor the
Trustee shall accept any contributions of assets to any REMIC unless (subject to
Section 10.01(f)) the Master Servicer and the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make such
contribution) to the effect that the inclusion of such assets in any REMIC will
not cause any REMIC formed hereunder to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject the REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(j) Neither the Master Servicer nor the Trustee shall (subject to
Section 10.01(f)) enter into any arrangement by which any REMIC formed hereunder
will receive a fee or other compensation for services nor permit any REMIC
formed hereunder to receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(k) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, the "latest possible maturity date" by which the
Certificate Principal Balance of each Class of Certificates representing a
regular interest in the REMIC would be reduced to zero is February 25, 2035.
(l) Within 30 days after the Closing Date, the REMIC Administrator
shall prepare and file with the Internal Revenue Service Form 8811, "Information
Return for Real Estate Mortgage Investment Conduits (REMIC) and Issuers of
Collateralized Debt Obligations" for each REMIC.
(m) Neither the Trustee nor the Master Servicer shall sell, dispose
of or substitute for any of the Mortgage Loans (except in connection with (i)
the default, imminent default or foreclosure of a Mortgage Loan, including but
not limited to, the acquisition or sale of a Mortgaged Property acquired by deed
in lieu of foreclosure, (ii) the bankruptcy of a REMIC, (iii) the termination of
any REMIC pursuant to Article IX of this Agreement or (iv) a purchase of
Mortgage Loans pursuant to Article II or III of this Agreement) nor acquire any
assets for any REMIC or sell or dispose of any investments in the Custodial
Account or the Certificate Account for gain, nor accept any contributions to any
REMIC after the Closing Date unless it has received an Opinion of Counsel that
such sale, disposition, substitution or acquisition will not (a) affect
adversely the status of any REMIC formed hereunder as a REMIC or (b) unless the
Master Servicer has determined in its sole discretion to indemnify the Trust
Fund against such tax, cause any REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
SECTION 10.02. MASTER SERVICER, REMIC ADMINISTRATOR AND TRUSTEE
INDEMNIFICATION.
(a) The Trustee agrees to indemnify the Trust Fund, the Insurer, the
Depositor, the REMIC Administrator and the Master Servicer for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Insurer, the Depositor or the Master Servicer,
as a result of a breach of the Trustee's covenants set forth in Article VIII or
this Article X. In the event that Residential Funding is no longer the Master
Servicer, the Trustee shall indemnify Residential Funding for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by Residential Funding as a result of a breach of the Trustee's
covenants set forth in Article VIII or this Article X.
(b) The REMIC Administrator agrees to indemnify the Trust Fund, the
Insurer, the Depositor, the Master Servicer and the Trustee for any taxes and
costs (including, without limitation, any reasonable attorneys' fees) imposed on
or incurred by the Trust Fund, the Insurer, the Depositor, the Master Servicer
or the Trustee, as a result of a breach of the REMIC Administrator's covenants
set forth in this Article X with respect to compliance with the REMIC
Provisions, including without limitation, any penalties arising from the
Trustee's execution of Tax Returns prepared by the REMIC Administrator that
contain errors or omissions; provided, however, that such liability will not be
imposed to the extent such breach is a result of an error or omission in
information provided to the REMIC Administrator by the Master Servicer in which
case Section 10.02(c) will apply.
(c) The Master Servicer agrees to indemnify the Trust Fund, the
Insurer, the Depositor, the REMIC Administrator and the Trustee for any taxes
and costs (including, without limitation, any reasonable attorneys' fees)
imposed on or incurred by the Trust Fund, the Insurer, the Depositor or the
Trustee, as a result of a breach of the Master Servicer's covenants set forth in
this Article X or in Article III with respect to compliance with the REMIC
Provisions, including without limitation, any penalties arising from the
Trustee's execution of Tax Returns prepared by the Master Servicer that contain
errors or omissions.
<PAGE>
ARTICLE I
MISCELLANEOUS PROVISIONS
SECTION 11.01. AMENDMENT.
(a) This Agreement or any Custodial Agreement may be amended from
time to time by the Depositor, the Master Servicer and the
Trustee, with the consent of the Insurer and without the
consent of any of the Certificateholders: (i) to cure any
ambiguity, (ii) to correct or supplement any provisions herein
or therein, which may be inconsistent with any other
provisions herein or therein or to correct any error,
(iii) to modify, eliminate or add to any of its provisions to such extent
as shall be necessary or desirable to maintain the qualification of the Trust
Fund as a REMIC at all times that any Certificate is outstanding or to avoid or
minimize the risk of the imposition of any tax on the Trust Fund pursuant to the
Code that would be a claim against the Trust Fund, provided that the Trustee has
received an Opinion of Counsel to the effect that (A) such action is necessary
or desirable to maintain such qualification or to avoid or minimize the risk of
the imposition of any such tax and (B) such action will not adversely affect in
any material respect the interests of any Certificateholder,
(iv) to change the timing and/or nature of deposits into the Custodial
Account or the Certificate Account or to change the name in which the Custodial
Account is maintained, provided that (A) the Certificate Account Deposit Date
shall in no event be later than the related Distribution Date, (B) such change
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder and (C) such change
shall not result in a reduction of the rating assigned to any Class of
Certificates below the lower of the then-current rating or the rating assigned
to such Certificates as of the Closing Date (without taking into account the
related Policy), as evidenced by a letter from each Rating Agency to such
effect,
(v) to modify, eliminate or add to the provisions of Section 5.02(f) or any
other provision hereof restricting transfer of the Class R Certificates by
virtue of their being the Aresidual interests@ in various REMICs provided that
(A) such change shall not result in reduction of the rating assigned to any such
Class of Certificates below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date, as evidenced by a letter
from each Rating Agency to such effect, and (B) such change shall not (subject
to Section 10.01(f)), as evidenced by an Opinion of Counsel (at the expense of
the party seeking so to modify, eliminate or add such provisions), cause any of
the REMICs or any of the Certificateholders (other than the transferor) to be
subject to a federal tax caused by a transfer to a Person that is not a
Permitted Transferee, or
(vi) to make any other provisions with respect to matters or questions
arising under this Agreement or such Custodial Agreement which shall not be
materially inconsistent with the provisions of this Agreement, provided that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Certificateholder and is authorized
or permitted under Section 11.09(d).
(B) THIS AGREEMENT OR ANY CUSTODIAL AGREEMENT MAY ALSO BE AMENDED FROM TIME
TO TIME BY THE DEPOSITOR, THE MASTER SERVICER AND THE TRUSTEE WITH THE CONSENT
OF THE INSURER AND THE HOLDERS OF CERTIFICATES EVIDENCING IN THE AGGREGATE NOT
LESS THAN 66% OF THE PERCENTAGE INTERESTS OF EACH CLASS OF CERTIFICATES AFFECTED
THEREBY FOR THE PURPOSE OF ADDING ANY PROVISIONS TO OR CHANGING IN ANY MANNER OR
ELIMINATING ANY OF THE PROVISIONS OF THIS AGREEMENT OR SUCH CUSTODIAL AGREEMENT
OR OF MODIFYING IN ANY MANNER THE RIGHTS OF THE HOLDERS OF CERTIFICATES OF SUCH
CLASS; PROVIDED, HOWEVER, that no such amendment shall: -------- ------- (i)
reduce in any manner the amount of, or delay the timing of, payments which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, (ii) adversely affect in any material respect the interest
of the Holders of Certificates of any Class in a manner other than as described
in clause (i) hereof without the consent of Holders of Certificates of such
Class evidencing, as to such Class, Percentage Interests aggregating not less
than 66%, or (iii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment, in any such
case without the consent of the Holders of all Certificates of such Class then
outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (subject to Section 10.01(f) at the expense of
the party seeking such amendment) to the effect that such amendment or the
exercise of any power granted to the Master Servicer, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of a
federal tax on the Trust Fund or cause any REMIC to fail to qualify as a REMIC
at any time that any Certificate is outstanding.
(d) Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
(e) The Depositor shall have the option, in its sole discretion, to
obtain and deliver to the Trustee any corporate guaranty, payment obligation,
irrevocable letter of credit, surety bond, insurance policy or similar
instrument or a reserve fund, or any combination of the foregoing, for the
purpose of protecting the Holders of the Class R Certificates against any or all
Realized Losses or other shortfalls. Any such instrument or fund shall be held
by the Trustee for the benefit of the Class R Certificateholders, but shall not
be and shall not be deemed to be under any circumstances included in the Trust
Fund. To the extent that any such instrument or fund constitutes a reserve fund
for federal income tax purposes, (i) any reserve fund so established shall be an
outside reserve fund and not an asset of the Trust Fund, (ii) any such reserve
fund shall be owned by the Depositor, and (iii) amounts transferred by the Trust
Fund to any such reserve fund shall be treated as amounts distributed by the
Trust Fund to the Depositor or any successor, all within the meaning of Treasury
regulations Section 1.860G-2(h). In connection with the provision of any such
instrument or fund, this Agreement and any provision hereof may be modified,
added to, deleted or otherwise amended in any manner that is related or
incidental to such instrument or fund or the establishment or administration
thereof, such amendment to be made by written instrument executed or consented
to by the Depositor and such related insurer but without the consent of any
Certificateholder and without the consent of the Master Servicer or the Trustee
being required unless any such amendment would impose any additional obligation
on, or otherwise adversely affect the interests of the Class A
Certificateholders, the Class R Certificateholders, the Master Servicer or the
Trustee, as applicable; provided that the Depositor obtains (subject to Section
10.01(f)) an Opinion of Counsel (which need not be an opinion of Independent
counsel) to the effect that any such amendment will not cause (a) any federal
tax to be imposed on the Trust Fund, including without limitation, any federal
tax imposed on Aprohibited transactions@ under Section 860F(a)(1) of the Code or
on Acontributions after the startup date@ under Section 860G(d)(1) of the Code
and (b) any REMIC to fail to qualify as a REMIC at any time that any Certificate
is outstanding. In the event that the Depositor elects to provide such coverage
in the form of a limited guaranty provided by General Motors Acceptance
Corporation, the Depositor may elect that the text of such amendment to this
Agreement shall be substantially in the form attached hereto as Exhibit I (in
which case Residential Funding=s Subordinate Certificate Loss Obligation as
described in such exhibit shall be established by Residential Funding=s consent
to such amendment) and that the limited guaranty shall be executed in the form
attached hereto as Exhibit J, with such changes as the Depositor shall deem to
be appropriate; it being understood that the Trustee has reviewed and approved
the content of such forms and that the Trustee=s consent or approval to the use
thereof is not required.
SECTION 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS.
(a) To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer and at its expense on direction by the Trustee (pursuant to the
request of the Insurer or Holders of Certificates entitled to at least 25% of
the Voting Rights), but only upon direction accompanied by an Opinion of Counsel
to the effect that such recordation materially and beneficially affects the
interests of the Certificateholders.
(b) For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument. SECTION 11.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder=s
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of any of the parties
hereto.
(b) No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth, or contained in the terms of the Certificates, be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee and the Insurer a written
notice of default and of the continuance thereof, as hereinbefore provided and
such default would not result in a claim under the related Policy, and unless
also the Holders of Certificates of any Class evidencing in the aggregate not
less than 25% of the related Percentage Interests of such Class, shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Insurer shall have given
its written consent, and the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, or
to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the common benefit of Certificateholders of such Class
or all Classes, as the case may be. For the protection and enforcement of the
provisions of this Section 11.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.04. GOVERNING LAW.
This agreement and the Certificates shall be governed by and
construed in accordance with the laws of the State of New York and
the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws. SECTION 11.05. NOTICES.
All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of the
Depositor, 8400 Normandale Lake Boulevard, Suite 700, Minneapolis, Minnesota
55437, Attention: President, or such other address as may hereafter be furnished
to the Master Servicer and the Trustee in writing by the Depositor, (b) in the
case of the Master Servicer, 10 Universal City Plaza, Suite 2100, Universal
City, California 91608, Attention: Managing Director, Residential Asset
Securities Corporation, Series 2000-KS1, or such other address as may be
hereafter furnished to the Depositor and the Trustee by the Master Servicer in
writing, (c) in the case of the Trustee, 1 Bank One Plaza, Suite IL10126,
Chicago, Illinois 60670-0126, Attention: Residential Asset Securities
Corporation Series 2000-KS or such other address as may hereafter be furnished
to the Depositor and the Master Servicer in writing by the Trustee, (d) in the
case of Fitch IBCA, One State Street Plaza, New York, New York 10004, Attention:
Residential Mortgage Pass-Through Monitoring, or such other address as may
hereafter be furnished to the Depositor, the Trustee and the Master Servicer in
writing by Fitch IBCA, (e) in the case of Standard & Poor=s, 55 Water Street,
New York, New York 10041, Attention: Mortgage Surveillance or such other address
as may be hereafter furnished to the Depositor, Trustee and Master Servicer by
Standard & Poor=s and (f) in the case of the Insurer, Ambac Assurance
Corporation, One State Street Plaza, New York, New York 10004, Attention:
Structured Finance B Mortgage-Backed Securities, or such other address as may be
hereafter furnished to the Depositor, the Trustee and the Master Servicer in
writing by the Insurer. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.06. NOTICES TO RATING AGENCY AND THE INSURER The
Depositor, the Master Servicer or the Trustee, as applicable, shall
notify each Rating Agency, the Insurer and each Subservicer at such
time as it is otherwise required pursuant to this Agreement to give
notice of the occurrence of, any of the events described in clause
(a), (b), (c), (d), (g), (h), (i) or (j) below or provide a copy to
each Rating Agency and the Insurer at such time as otherwise
required to be delivered pursuant to this Agreement of any of the
statements described in clauses (e) and (f) below: (a) a material
change or amendment to this Agreement, (b) the occurrence of an
Event of Default, (c) the termination or appointment of a successor
Master Servicer or Trustee or a change in the majority ownership of
the Trustee, (d) the filing of any claim under the Master Servicer=s
blanket fidelity bond and the errors and omissions insurance policy
required by Section 3.12 or the cancellation or modification of
coverage under any such instrument, (e) the statement required to be
delivered to the Holders of each Class of Certificates pursuant to
Section 4.03, (f) the statements required to be delivered pursuant
to Sections 3.18 and 3.19, (g) a change in the location of the
Custodial Account or the Certificate Account, (h) the occurrence of
any monthly cash flow shortfall to the Holders of any Class of
Certificates resulting from the failure by the Master Servicer to
make an Advance pursuant to Section 4.04 or the occurrence of a
Trigger Event, (i) the occurrence of the Final Distribution Date,
and (j) the repurchase of or substitution for any Mortgage Loan,
PROVIDED, HOWEVER, that with respect to notice of the occurrence of the events
described in clauses (d), (g) or (h) above, the Master Servicer shall provide
prompt written notice to each Rating Agency, the Insurer and the Subservicer of
any such event known to the Master Servicer.
In addition to the above delivery requirements, the Depositor, the Master
Servicer or the Trustee, as applicable, shall provide a copy to the Insurer, at
such time as it is otherwise required to deliver pursuant to this Agreement, of
any other written confirmation, written notice or legal opinion.
SECTION 11.07. SEVERABILITY OF PROVISIONS
If any one or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Certificates or the rights of the Holders thereof or the Insurer.
SECTION 11.08. SUPPLEMENTAL PROVISIONS FOR RESECURITIZATION.
(a) This Agreement may be supplemented by means of the addition of a
separate Article hereto (a ASupplemental Article@) for the purpose of
resecuritizing any of the Certificates issued hereunder, under the following
circumstances. With respect to any Class or Classes of Certificates issued
hereunder, or any portion of any such Class, as to which the Depositor or any of
its Affiliates (or any designee thereof) is the registered Holder (the
AResecuritized Certificates@), the Depositor may deposit such Resecuritized
Certificates into a new REMIC, grantor trust, FASIT or custodial arrangement (a
ARestructuring Vehicle@) to be held by the Trustee pursuant to a Supplemental
Article. The instrument adopting such Supplemental Article shall be executed by
the Depositor, the Master Servicer and the Trustee; provided, that neither the
Master Servicer nor the Trustee shall withhold their consent thereto if their
respective interests would not be materially adversely affected thereby. To the
extent that
the terms of the Supplemental Article do not in any way affect any provisions of
this Agreement as to any of the Certificates initially issued hereunder, the
adoption of the Supplemental Article shall not constitute an Aamendment@ of this
Agreement.
(b) Each Supplemental Article shall set forth all necessary
provisions relating to the holding of the Resecuritized Certificates by the
Trustee, the establishment of the Restructuring Vehicle, the issuing of various
classes of new certificates by the Restructuring Vehicle and the distributions
to be made thereon, and any other provisions necessary to the purposes thereof.
In connection with each Supplemental Article, the Depositor shall deliver to the
Trustee an Opinion of Counsel to the effect that (i) the Restructuring Vehicle
will qualify as a REMIC, grantor trust, FASIT or other entity not subject to
taxation for federal income tax purposes and (ii) the adoption of the
Supplemental Article will not endanger the status of any REMIC as a REMIC or
(subject to Section 10.01(f)) result in the imposition of a tax upon the Trust
Fund (including but not limited to the tax on prohibited transaction as defined
in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC as set
forth in Section 860(G)(d) of the Code.
SECTION 11.09. RIGHTS OF THE INSURER
(a) The Insurer is an express third-party beneficiary of this
Agreement.
(b) In each Distribution Date the Trustee shall forward to the Insurer a
copy of the reports furnished to the Class A Certificateholders and the
Depositor on such Distribution Date.
(c) The Trustee shall provide to the Insurer copies of any report, notice,
Opinion of Counsel, Officer=s Certificate, request for consent or request for
amendment to any document related hereto promptly upon the Trustee=s production
or receipt thereof. (d) Unless an Insurer Default exists, the Trustee and the
Depositor shall not agree to any amendment to this Agreement without first
having obtained the prior written consent of the Insurer, if such consent is not
unreasonably withheld.
(e) So long as there does not exist a failure by the Insurer to make a
required payment under the Policies, the Insurer shall have the right to
exercise all rights of the Holders of the Class A Certificates under this
Agreement without any consent of such Holders, and such Holders may exercise
such rights only with the prior written consent of the Insurer, except as
provided herein.
(f) The Insurer shall not be entitled to exercise any of its rights
hereunder so long as there exists a failure by the Insurer to make a required
payment under the related Policy.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized and their respective seals, duly attested, to be hereunto
affixed, all as of the date and year first above written.
RESIDENTIAL ASSET SECURITIES CORPORATION
BY: /S/ JULIE STEINHAGEN
Name: Julie Steinhagen
Title: Vice President
ATTEST:/S/ STEPHEN HYNES
Name: Stephen Hynes
Title: Vice President
RESIDENTIAL FUNDING CORPORATION
BY: /S/ STEPHEN HYNES
Name: Stephen Hynes
Title: Director
ATTEST:/S/ LISA LUNDSTEN
Name: Lisa Lundsten
Title: Director
BANK ONE, NATIONAL ASSOCIATION, as Trustee
BY:/S/ STEVEN M. WAGNER
Name: Steven M. Wagner
Title: First Vice President
ATTEST:/S/ R.J. BRUNER
Name: R.J. Bruner
Title: Vice President
2
900306v5
<PAGE>
STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
ON THE 28TH day of February, 2000 before me, a notary public in and
for said State, personally appeared Julie Steinhagen, known to me to
be a Vice President of Residential Asset Securities Corporation, one
of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed
the within instrument. IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this
certificate first above written.
----------------------------
Notary Public
[Notarial Seal]
3
<PAGE>
STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
ON THE 28TH day of February, 2000 before me, a notary public in and for
said State, personally appeared Stephen Hynes, known to me to be a Director of
Residential Funding Corporation, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]
4
900306v5
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
ON THE 24TH day of February, 2000 before me, a notary public in and
for said State, personally appeared Steven M. Wagner, known to me to be a First
Vice President of Bank One, National Association, the national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such national banking association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------
Notary Public
[Notarial Seal]
5
900306v5
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section.1.01. Definitions 2
...................................Accrued Certificate Interest 2
.......................................Adjustable Group II Loan 3
...................................Adjustable Rate Certificates 3
.........................................Adjusted Mortgage Rate 3
................................................Adjustment Date 3
........................................................Advance 3
......................................................Affiliate 3
......................................................Agreement 3
............................Amount Held for Future Distribution 3
................................................Appraised Value 4
.....................................................Assignment 4
...........................................Assignment Agreement 4
..................................Available Distribution Amount 4
..............................................Bankruptcy Amount 5
................................................Bankruptcy Code 5
................................................Bankruptcy Loss 5
........................................Basis Risk Reserve Fund 5
...........................................Basis Risk Shortfall 5
.........................................Book-Entry Certificate 5
...................................................Business Day 6
..................................................Buydown Funds 6
..........................................Buydown Mortgage Loan 6
...............................................Cash Liquidation 6
....................................................Certificate 6
............................................Certificate Account 6
...............................Certificate Account Deposit Date 6
....................................Certificateholder or Holder 6
....................................Certificate Insurer Premium 7
...............................Certificate Insurer Premium Rate 7
..............................................Certificate Owner 7
..................................Certificate Principal Balance 7
.................Certificate Register and Certificate Registrar 7
..........................................................Class 7
............................................Class A Certificate 7
..........................................Class A-I Certificate 8
........................Class A-I-6 Lockout Distribution Amount 8
.................................Class A-I-6 Lockout Percentage 8
...............Class A-I-6 Lockout Pro Rata Distribution Amount 8
...........................................Class A-I Percentage 8
...............................Class A-II Basis Risk Shortfalls 8
.........................................Class A-II Certificate 8
..........................................Class A-II Percentage 9
............................................Class R Certificate 9
..........................................Class R-I Certificate 9
.........................................Class R-II Certificate 9
........................................Class R-III Certificate 9
...........................................Class SB Certificate 9
.........................................Class SB-I Certificate 9
........................................Class SB-II Certificate 9
...................................................Closing Date 9
...........................................................Code 9
...................................Combined Loan-to-Value Ratio 10
..........................................Compensating Interest 10
........................................Converted Mortgage Loan 10
......................................CONVERTIBLE MORTGAGE Loan 10
- -
.........................................Corporate Trust Office 10
....................................................Curtailment 11
..............................................Custodial Account 11
............................................Custodial Agreement 11
......................................................Custodian 11
...................................................Cut-off Date 11
.................................Cut-off Date Principal Balance 11
.........................................Debt Service Reduction 11
..............................................Deficiency Amount 11
............................................Deficient Valuation 11
.........................................Definitive Certificate 12
..........................................Deleted Mortgage Loan 12
..............................................Delinquency Ratio 12
.....................................................Delinquent 12
.....................................................Depository 12
.........................................Depository Participant 12
........................................Destroyed Mortgage Note 12
.............................................Determination Date 12
......................................Disqualified Organization 12
..............................................Distribution Date 13
.......................................................Due Date 13
.....................................................Due Period 13
...............................................Eligible Account 13
...............................................Event of Default 13
.........................................Excess Bankruptcy Loss 14
..............................................Excess Fraud Loss 14
.....................................Excess Special Hazard Loss 14
...........................................Extraordinary Events 14
...........................................Extraordinary Losses 14
..........................................................FASIT 15
...........................................................FDIC 15
..........................................................FHLMC 15
........................................Final Distribution Date 15
.....................................................Fitch IBCA 15
........................................FIXED RATE Certificates 15
-
...........................................................FNMA 15
............................................Foreclosure Profits 15
..............................................Fraud Loss Amount 15
...................................................Fraud Losses 16
...................................................Gross Margin 16
.............................Group I Available Excess Cash Flow 16
...........................Group I Cumulative Insurance Payment 16
..................................................Group I Loans 16
.................................................Group I Policy 17
.........................................Group I REO Properties 17
..........................Group I Prepayment Interest Shortfall 17
............................Group II Available Excess Cash Flow 17
.........................Group II Cumulative Insurance Payments 17
.................................................Group II Loans 17
................................................Group II Policy 17
.........................Group II Prepayment Interest Shortfall 17
........................................Group II REO Properties 17
.................................................High Cost Loan 17
....................................................Independent 18
..........................................................Index 18
..........................Initial Certificate Principal Balance 18
..............................................Insurance Account 18
............................................Insurance Agreement 18
.............................................Insurance Proceeds 18
.................................................Insured Amount 19
........................................................Insurer 19
................................................Insurer Account 19
................................................Insurer Default 19
........................................Interest Accrual Period 19
...........................................Junior Mortgage Loan 19
...............................................Late Collections 19
..............................................Late Payment Rate 19
..........................................................LIBOR 20
.............................................LIBOR Business Day 20
.....................................LIBOR Rate Adjustment Date 20
...........................................Liquidation Proceeds 20
............................................Loan-to-Value Ratio 20
.....................................................Loan Group 20
.....................................................Loan Group 20
..................................Loan Group I Excess Cash Flow 20
.........................Loan Group I Optional Termination Date 20
..........................Loan Group I Stated Principal Balance 20
..................................................Loan Group II 20
.................................Loan Group II Excess Cash Flow 20
........................Loan Group II Optional Termination Date 21
.........................Loan Group II Stated Principal Balance 21
..................................................Maturity Date 21
...........................................MAXIMUM GROUP I Rate 21
-
..........................................Maximum Group II Rate 21
..........................................Maximum Mortgage Rate 21
......................................Maximum Net Mortgage Rate 21
...........................................................MERS 21
...................................................MERS7 System 21
............................................................MIN 21
..........................................Minimum Mortgage Rate 21
.........................................Modified Mortgage Loan 22
.....................................Modified Net Mortgage Rate 22
.......................................................MOM Loan 22
................................................Monthly Payment 22
........................................................Moody=s 22
.......................................................Mortgage 22
..................................................Mortgage File 22
.........................................Mortgage Loan Schedule 22
.................................................Mortgage Loans 24
..................................................Mortgage Note 24
..................................................Mortgage Rate 24
.............................................Mortgaged Property 24
......................................................Mortgagor 24
..............................................Net Mortgage Rate 24
....................................Non-Primary Residence Loans 24
.......................................Non-United States Person 25
.........................................Nonrecoverable Advance 25
...................................Nonsubserviced Mortgage Loan 25
....................................................Note Margin 25
.........................................................Notice 25
..........................................Officers= Certificate 25
.............................................Opinion of Counsel 25
......................................Outstanding Mortgage Loan 25
.............................................Ownership Interest 25
..............................................Pass-Through Rate 25
...................................................Paying Agent 26
............................................Percentage Interest 26
...................................................Periodic Cap 26
..........................................Permitted Investments 26
...........................................Permitted Transferee 27
.........................................................Person 27
.............................................Policy or Policies 27
..........................................Prepayment Assumption 28
..................................Prepayment Interest Shortfall 28
..............................................Prepayment Period 28
.......................................Primary Insurance Policy 28
..................................Principal Distribution Amount 28
...........................................Principal Prepayment 29
...................................Principal Prepayment in Full 29
..................................................Program Guide 29
.................................................Purchase Price 30
.............................Qualified Substitute Mortgage Loan 30
..................................................Rating Agency 30
..................................................Realized Loss 30
....................................................Record Date 31
.....................................................Relief Act 31
..........................................................REMIC 31
............................................REMIC Administrator 31
........................................................REMIC I 31
...............................................REMIC I Interest 32
.......................................REMIC I Regular Interest 32
..............................................REMIC II Interest 32
......................................REMIC II Regular Interest 32
........................................REMIC I Remittance Rate 32
.......................................................REMIC II 32
.......................................REMIC II Remittance Rate 32
......................................................REMIC III 33
..........................................REMIC III Certificate 33
..................................REMIC III Regular Certificate 33
.....................................REMIC III Regular Interest 33
...............................................REMIC Provisions 33
................................................REO Acquisition 33
................................................REO Disposition 33
...........................................REO Imputed Interest 33
...................................................REO Proceeds 33
...................................................REO Property 33
............................................Request for Release 33
......................................Required Insurance Policy 34
............................................Residential Funding 34
............................................Responsible Officer 34
.............................Rolling Six Month Delinquency Rate 34
.........................................................Seller 34
.............................................Seller=s Agreement 34
.............................................Servicing Accounts 34
.............................................Servicing Advances 34
..................................................Servicing Fee 34
.............................................Servicing Fee Rate 35
..............................................Servicing Officer 35
.........................................Servicing Modification 35
..........................................Special Hazard Amount 35
............................................Special Hazard Loss 36
..............................................Standard & Poor=s 36
...................................................Startup Date 36
.......................................Stated Principal Balance 36
............................................Subordinated Amount 36
................................Subordination Deficiency Amount 36
..................................Subordination Increase Amount 37
.................................Subordination Reduction Amount 37
......................................Subserviced Mortgage Loan 37
....................................................Subservicer 37
............................................Subservicer Advance 37
...........................................Subservicing Account 37
.........................................Subservicing Agreement 38
...............................................Subservicing Fee 38
...................................Targeted Subordinated Amount 38
....................................................Tax Returns 40
.......................................................Transfer 40
.....................................................Transferee 40
.....................................................Transferor 40
..................................................Trigger Event 40
.....................................................Trust Fund 41
...........................................12 Month Loss Amount 41
........................Unadjusted Accrued Certificate Interest 41
........Uniform Single Attestation Program for Mortgage Bankers 42
................................................Uninsured Cause 42
...........................................United States Person 42
..................................................Voting Rights 42
Section 1.02.Determination of LIBOR 42
Section 1.03.Certain REMIC Matters 43
<TABLE>
<CAPTION>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
<S> <C> <C>
Section 2.01.Conveyance of Mortgage Loans. 46
Section 2.02.Acceptance by Trustee 49
Section 2.03.Representations, Warranties and Covenants of the Master
Servicer and the Depositor 51
Section 2.04.Representations and Warranties of Sellers; Additional
Representations and Warranties of Residential Funding 53
Section 2.05.Execution and Authentication of Certificates. 55
SECTION 2.06.CONVERTIBLE Mortgage Loans 56
ARTICLE III
ADMINISTRATION AND SERVICING
Section 3.01.Master Servicer to Act as Servicer 56
Section 3.02.Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers= and Sellers=
Obligations 58
Section 3.03.Successor Subservicers. 59
Section 3.02.Liability of the Master Servicer 60
Section 3.05.No Contractual Relationship Between Subservicer and
Trustee or Certificateholders 60
Section 3.06.Assumption or Termination of Subservicing Agreements by
Trustee 60
Section 3.07.Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account 61
Section 3.08.Subservicing Accounts; Servicing Accounts 63
Section 3.09.Access to Certain Documentation and Information Regarding
the Mortgage Loans 65
Section 3.10.Permitted Withdrawals from the Custodial Account 65
Section 3.11.Maintenance of Primary Insurance Coverage 67
Section 3.12.Maintenance of Fire Insurance and Omissions and Fidelity
Coverage. 67
Section 3.13.Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments 69
Section 3.14.Realization Upon Defaulted Mortgage Loans 71
Section 3.15.Trustee to Cooperate; Release of Mortgage Files 74
Section 3.16.Servicing and Other Compensation; Compensating Interest 75
Section 3.17.Reports to the Trustee and the Depositor 76
Section 3.18.Annual Statement as to Compliance 76
Section 3.19.Annual Independent Public Accountants= Servicing Report 77
Section 3.20.Right of the Depositor in Respect of the Master Servicer77
Section 3.21.[Reserved] 78
Section 3.22.Administration of Buydown Funds 78
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01.Certificate Account. 79
Section 4.02.Distributions 79
Section 4.03.Statements to Certificateholders 84
Section 4.04.Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer 87
Section 4.05.Allocation of Realized Losses 88
Section 4.06.Reports of Foreclosures and Abandonment of Mortgaged
Property 89
Section 4.07.Optional Purchase of Defaulted Mortgage Loans 90
Section 4.08.The Policies 90
ARTICLE V
THE CERTIFICATES
Section 5.01.The Certificates 91
Section 5.02.Registration of Transfer and Exchange of Certificate 93
Section 5.03.Mutilated, Destroyed, Lost or Stolen Certificates 98
Section 5.04.Persons Deemed Owners 98
Section 5.05.Appointment of Paying Agent 98
Section 5.06.Optional Purchase of Certificates 99
SECTION 5.07.BASIS RISK RESERVE Fund 100
-
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01.Respective Liabilities of the Depositor and the Master
Servicer 101
Section 6.02.Merger or Consolidation of the Depositor or the Master
Servicer; Assignment of Rights and Delegation of Duties
by Master Servicer 101
Section 6.03.Limitation on Liability of the Depositor, the Master
Servicer and Others. 102
Section 6.04.Depositor and Master Servicer Not to Resign 103
ARTICLE VII
DEFAULT
Section 7.01.Events of Default 104
Section 7.02.Trustee or Depositor to Act; Appointment of Successor 106
Section 7.03.Notification to Certificateholders 107
Section 7.04.Waiver of Events of Default 107
Section 7.05.Trigger Events; Removal of Master Servicer 108
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01.Duties of Trustee 109
Section 8.02.Certain Matters Affecting the Trustee 111
Section 8.03.Trustee Not Liable for Certificates or Mortgage Loans 112
Section 8.04.Trustee May Own Certificates 112
Section 8.05.Master Servicer to Pay Trustee=s Fees and Expenses;
Indemnification 113
Section 8.06.Eligibility Requirements for Trustee 114
Section 8.07.Resignation and Removal of the Trustee 114
Section 8.08.Successor Trustee 115
Section 8.09.Merger or Consolidation of Trustee 116
Section 8.10.Appointment of Co-Trustee or Separate Trustee 116
Section 8.11.Appointment of Custodians 117
Section 8.12.Appointment of Office or Agency 117
ARTICLE IX
TERMINATION
Section 9.01.Termination Upon Purchase by the Master Servicer or the
Depositor or Liquidation of All Mortgage Loans 117
Section 9.02.Termination of REMIC III 120
Section 9.03.Additional Termination Requirements 120
ARTICLE X
REMIC PROVISIONS
Section 10.01.REMIC Administration 121
Section 10.02.Master Servicer, REMIC Administrator and Trustee
Indemnification 125
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01.Amendment 125
Section 11.02.Recordation of Agreement; Counterparts 125
Section 11.03.Limitation on Rights of Certificateholders 125
Section 11.04.Governing Law 125
Section 11.05.Notices 125
Section 11.06.Notices to Rating Agency and the Insurer 125
Section 11.07.Severability of Provisions 125
Section 11.08.Supplemental Provisions for Resecuritization 125
Section 11.09. Rights of the Insurer 125
</TABLE>
<PAGE>
EXHIBITS
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class SB Certificate
Exhibit B Form of Class R Certificate
Exhibit C Custodial Agreement
Exhibit D-1 Mortgage Loan Schedule B Group - I
Exhibit D-2 Mortgage Loan Schedule B Group -II
Exhibit E Forms Of Request For Release
Exhibit F-1 Form of Transfer Affidavitand Agreement
Exhibit F-2 Form of Transferor Certificate
Exhibit G Form of Investor Representation Letter
Exhibit H Form of Transferor Representation Letter
Exhibit I Text of Amendment to Pooling and Servicing Agreement
Pursuant to Section 11.01(e) for a Limited Guaranty
Exhibit J Form of Limited Guaranty
Exhibit K Form of Lender Certification for Assignment of Mortgage Loan
Exhibit L Form of Rule 144A Investment Representation
Exhibit M High Cost Mortgage Loans
Exhibit N Representations and Warranties
Exhibit O-1 Certificate Guaranty Insurance Policy B Loan Group I
Exhibit O-2 Certificate Guaranty Insurance Policy B Loan Group II
INDEX OF DEFINED TERMS
12 Month Loss Amount........................................................41
Accrued Certificate Interest.................................................2
Adjustable Group II Loan.....................................................3
Adjusted Mortgage Rate.......................................................3
Adjustment Date..............................................................3
Advance......................................................................3
Agreement....................................................................3
Amount Held for Future Distribution..........................................3
Appraised Value..............................................................4
Assignment...................................................................4
Assignment Agreement.........................................................4
Available Distribution Amount................................................4
Bankruptcy Amount............................................................5
Bankruptcy Code..............................................................5
Bankruptcy Loss..............................................................5
Basis Risk Reserve Funds.....................................................5
Basis Risk Shortfall.........................................................5
Book-Entry Certificate.......................................................5
Business Day.................................................................6
Buydown Funds................................................................6
Buydown Mortgage Loan........................................................6
Cash Liquidation.............................................................6
Certificate..................................................................6
Certificate Account..........................................................6
Certificate Account Deposit Date.............................................6
Certificate Insurer Premium..................................................7
Certificate Insurer Premium Rate.............................................7
Certificate Owner............................................................7
Certificate Principal Balance................................................7
Certificate Register and Certificate Registrar...............................7
Certificateholder or Holder..................................................6
Class........................................................................7
Class A Certificate..........................................................7
Class A-I Certificate........................................................8
Class A-I Percentage.........................................................8
Class A-I-6 Lockout Distribution Amount......................................8
Class A-I-6 Lockout Percentage...............................................8
CLASS A-I-6 LOCKOUT PRO Rata Distribution Amount.............................8
Class A-II Basis Risk Shortfall..............................................8
Class A-II Certificate.......................................................8
Class A-II Percentage........................................................9
Class R Certificate..........................................................9
Class R-I Certificate........................................................9
Class R-II Certificate.......................................................9
Class R-III Certificate......................................................9
Class SB Certificate.........................................................9
Class SB-I Certificate.......................................................9
Class SB-II Certificate......................................................9
Closing Date.................................................................9
Code.........................................................................9
Combined Loan-to-Value Ratio................................................10
Compensating Interest.......................................................10
Converted Mortgage Loan.....................................................10
Convertible Mortgage Loan...................................................10
Corporate Trust Office......................................................10
Curtailment.................................................................11
Custodial Account...........................................................11
Custodial Agreement.........................................................11
Custodian...................................................................11
Cut-off Date................................................................11
Cut-off Date Principal Balance..............................................11
Debt Service Reduction......................................................11
Deficiency Amount...........................................................11
Deficient Valuation.........................................................11
Definitive Certificate......................................................12
Deleted Mortgage Loan.......................................................12
Delinquency Ratio...........................................................12
Delinquent..................................................................12
Depository..................................................................12
Depository Participant......................................................12
Destroyed Mortgage Note.....................................................12
Determination Date..........................................................12
Disqualified Organization...................................................12
Distribution Date...........................................................13
Due Date....................................................................13
Due Period..................................................................13
Eligible Account............................................................13
Event of Default............................................................13
Excess Bankruptcy Loss......................................................14
Excess Fraud Loss...........................................................14
Excess Special Hazard Loss..................................................14
Extraordinary Events........................................................14
Extraordinary Losses........................................................14
FASIT.......................................................................15
FDIC........................................................................15
FHLMC.......................................................................15
Final Distribution Date.....................................................15
Fitch IBCA..................................................................15
Fixed Rate Certificates.....................................................15
FNMA........................................................................15
Foreclosure Profits.........................................................15
Fraud Loss Amount...........................................................15
Fraud Losses................................................................16
Gross Margin................................................................16
Group I Available Excess Cash Flow..........................................16
Group I Cumulative Insurance Payment........................................16
Group I Loans...............................................................16
Group I Prepayment Interest Shortfall.......................................17
Group I REO Properties......................................................17
Group II Available Excess Cash Flow.........................................17
Group II Cumulative Insurance Payments......................................17
Group II Loans..............................................................17
Group II Prepayment Interest Shortfall......................................17
Group II REO Properties.....................................................17
High Cost Loan..............................................................17
Independent.................................................................18
Index.......................................................................18
Initial Certificate Principal Balance.......................................18
Initial Class A-II Basis Risk Reserve Fund Deposit..........................18
Insurance Account...........................................................18
Insurance Agreement.........................................................18
Insurance Proceeds..........................................................18
Insured Amount..............................................................19
Insurer.....................................................................19
Insurer Account.............................................................19
Insurer Default.............................................................19
Interest Accrual Period.....................................................19
Junior Mortgage Loan........................................................19
Late Collections............................................................19
Late Payment Rate...........................................................19
LIBOR.......................................................................20
LIBOR Business Day..........................................................20
LIBOR Rate Adjustment Date..................................................20
Liquidation Proceeds........................................................20
Loan Group..................................................................20
Loan Group I................................................................20
Loan Group I Excess Cash Flow...............................................20
Loan Group I Optional Termination Date......................................20
Loan Group I Stated Principal Balance.......................................20
Loan Group II...............................................................20
Loan Group II Excess Cash Flow..............................................20
Loan Group II Optional Termination Date.....................................21
Loan Group II Stated Principal Balance......................................21
Loan-to-Value Ratio.........................................................20
Maturity Date...............................................................21
Maximum Group I Rate........................................................21
Maximum Mortgage Rate.......................................................21
Maximum Net Mortgage Rate...................................................21
MERS........................................................................21
MERS7 System................................................................21
MIN.........................................................................21
Minimum Mortgage Rate.......................................................21
Modified Mortgage Loan......................................................22
Modified Net Mortgage Rate..................................................22
MOM Loan....................................................................22
Monthly Payment.............................................................22
Moody=s.....................................................................22
Mortgage....................................................................22
Mortgage File...............................................................22
Mortgage Loan Schedule......................................................22
Mortgage Loans..............................................................24
Mortgage Note...............................................................24
Mortgage Rate...............................................................24
Mortgaged Property..........................................................24
Mortgagor...................................................................24
Net Mortgage Rate...........................................................24
Non-Primary Residence Loans.................................................24
Nonrecoverable Advance......................................................25
Nonsubserviced Mortgage Loan................................................25
Non-United States Person....................................................25
Note Margin.................................................................25
Notice......................................................................25
Officers= Certificate.......................................................25
Opinion of Counsel..........................................................25
Outstanding Mortgage Loan...................................................25
Ownership Interest..........................................................25
Pass-Through Rate...........................................................25
Paying Agent................................................................26
Percentage Interest.........................................................26
Periodic Cap................................................................26
Permitted Investments.......................................................26
Permitted Transferee........................................................27
Person......................................................................27
Policy......................................................................27
Prepayment Assumption.......................................................28
Prepayment Interest Shortfall...............................................28
Prepayment Period...........................................................28
Primary Insurance Policy....................................................28
Principal Distribution Amount...............................................28
Principal Prepayment........................................................29
Principal Prepayment in Full................................................29
Program Guide...............................................................29
Purchase Price..............................................................30
Qualified Substitute Mortgage Loan..........................................30
Rating Agency...............................................................30
Realized Loss...............................................................30
Record Date.................................................................31
Relief Act..................................................................31
REMIC.......................................................................31
REMIC Administrator.........................................................31
REMIC I.....................................................................31
REMIC I Remittance Rate.....................................................32
REMIC II....................................................................32
REMIC II Remittance Rate....................................................32
REMIC III...................................................................33
REMIC III Certificate.......................................................33
REMIC III Regular Certificate...............................................33
REMIC III Regular Interest..................................................33
REMIC Provisions............................................................33
REO Acquisition.............................................................33
REO Disposition.............................................................33
REO Imputed Interest........................................................33
REO Proceeds................................................................33
REO Property................................................................33
Request for Release.........................................................33
Required Insurance Policy...................................................34
Responsible Officer.........................................................34
Rolling Six Month Delinquency Rate..........................................34
Seller......................................................................34
Seller=s Agreement..........................................................34
Servicing Accounts..........................................................34
Servicing Advances..........................................................34
Servicing Fee...............................................................34
Servicing Fee Rate..........................................................35
Servicing Modification......................................................35
Servicing Officer...........................................................35
Special Hazard Amount.......................................................35
Special Hazard Loss.........................................................14
Standard & Poor=s...........................................................36
Startup Date................................................................36
Stated Principal Balance....................................................36
Subordinated Amount.........................................................36
Subordination Deficiency Amount.............................................36
Subordination Increase Amount...............................................37
Subordination Reduction Amount..............................................37
Subserviced Mortgage Loan...................................................37
Subservicer.................................................................37
Subservicer Advance.........................................................37
Subservicing Account........................................................37
Subservicing Agreement......................................................38
Subservicing Fee............................................................38
Targeted Subordinated Amount................................................38
Tax Returns.................................................................40
Transfer....................................................................40
Transferee..................................................................40
Transferor..................................................................40
Trigger Event...............................................................40
Trust Fund..................................................................41
Unadjusted Accrued Certificate Interest.....................................41
Uniform Single Attestation Program for Mortgage Bankers.....................42
Uninsured Cause.............................................................42
United States Person........................................................42
Voting Rights...............................................................42
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE CONSISTS OF A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED [AND RIGHTS TO RECEIVE PAYMENTS IN RESPECT OF
BASIS RISK SHORTFALL (for the Class A-II Certificates)].
<PAGE>
CLASS [A-I- ][A-II- ] Senior Certificate No. 1
[Adjustable Pass-Through Rate-
% Initial Pass-Through Rate]
[ % Pass-Through Rate]
Date of Pooling and Servicing Percentage Interest: ___%
Agreement and Cut-off Date:
February 1, 2000
First Distribution Date: Aggregate Initial Certificate Principal
MARCH 27, 2000 BALANCE OF THE CLASS [A-I- ][A-II- ]
Certificates:
$
Master Servicer: Initial Certificate Principal Balance
RESIDENTIAL FUNDING CORPORATION OF THIS CLASS [A-I- ][A-II- ]
Certificate: $
Assumed Final Distribution Date: CUSIP: 76110W
- ------------------
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATE
SERIES 2000-KS1
evidencing a percentage interest in the distributions ALLOCABLE TO
THE CLASS [A-I- ][A-II- ] Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed and adjustable interest rate, first and junior lien mortgage
loans formed and sold by RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund and
proceeds of any claim payable on the Policy (as defined in the Agreement), and
does not represent an obligation of or interest in Residential Asset Securities
Corporation, the Master Servicer, the Trustee referred to below or GMAC Mortgage
Group, Inc. or any of their affiliates. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental agency
or instrumentality or by Residential Asset Securities Corporation, the Master
Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their affiliates.
None of the Depositor, the Master Servicer, GMAC Mortgage Group, Inc. or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial
Certificate Principal Balance of this Certificate by the aggregate INITIAL
CERTIFICATE PRINCIPAL BALANCE OF ALL CLASS [A-I- ][A-II- ] Certificates, both as
specified above) in certain distributions with respect to the Trust Fund
consisting primarily of an interest in a pool of conventional one- to
four-family fixed and adjustable interest rate, first and junior lien mortgage
loans (the "Mortgage Loans"), formed and sold by Residential Asset Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicer and Bank One,
National Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing as described in
the Agreement, to the Person in whose name this Certificate is registered at the
close of business on the last day (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the month immediately
preceding the month of such distribution (the "Record Date"), from the related
Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to HOLDERS OF CLASS [A-I- ][A-II-
] Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will
be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Home Equity Mortgage Asset-Backed Pass-Through
Certificates of the Series specified hereon (herein collectively called the
"Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders and
the Insurer may be made by the Master Servicer from time to time for purposes
other than distributions to Certificateholders, such purposes including without
limitation reimbursement to the Depositor and the Master Servicer of advances
made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Insurer and the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional circumstances,
without the consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Insurer, and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee the Insurer, or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Depositor, the Master Servicer, the Trustee the Insurer, nor any
such agent shall be affected by notice to the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Master Servicer
or the Depositor from the Trust Fund of all remaining Group I Loans and Group II
Loans and all property acquired in respect of such Mortgage Loans, thereby
effecting early retirement of the related Certificates. The Agreement permits,
but does not require, the Master Servicer or the Depositor (i) to purchase, at a
price determined as provided in the Agreement, all remaining Group I Loans and
Group II Loans and all property acquired in respect of any Mortgage Loan or (ii)
to purchase in whole, but not in part, all of the Class A-I Certificates or
Class A-II Certificates from the Holders thereof; provided, that any such option
may only be exercised if the aggregate Stated Principal Balance of the Group I
Loans or Group II Loans, as applicable, as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Group I Loans or Group II Loans, as
applicable.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
BY:
Authorized Signatory
Dated: February 28, 2000
Certificate of Authentication
THIS IS ONE OF THE CLASS [ ] Certificates referred to in the
within-mentioned Agreement.
BANK ONE, NATIONAL ASSOCIATION,
as Certificate Registrar
BY:
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
=============================================================================
- -----------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Home Equity Mortgage
Pass-Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
- -----------------------------------------------------------------------------
Dated:________________ _________________________________________
Signature by or on behalf of assignor
-----------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
- ----------------------------------------------------------------------------
FOR THE ACCOUNT OF
ACCOUNT NUMBER,
OR, IF MAILED BY CHECK, TO:
APPLICABLE STATEMENTS SHOULD BE MAILED TO:
This information is provided by _________________________, the assignee
named above, or _____________________________________________, as its agent.
<PAGE>
A-2-8
EXHIBIT A-2
FORM OF CLASS SB CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-I AND CLASS
A-II CERTIFICATES, TO THE EXTENT DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT (THE
"AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE AGREEMENT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE COMPANY AND THE
TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE
AND WILL NOT SUBJECT THE MASTER SERVICER, THE COMPANY OR THE TRUSTEE TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS FEBRUARY 28, 2000. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT [28]% OF THE CONSTANT PREPAYMENT RATE (AS
DESCRIBED IN THE PROSPECTUS SUPPLEMENT) OR [25]% HEP WITH RESPECT TO FIXED RATE
LOANS, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $ OF OID PER $100,000
OF INITIAL CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY IS % AND THE
AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $ PER
$100,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING THE
APPROXIMATE METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE CONSTANT PREPAYMENT RATE OR AT ANY OTHER RATE.
<PAGE>
Class [SB-I][SB-II] Subordinate Certificate No. 1
Adjustable Pass-Through Rate
% Initial Pass-Through Rate
Date of Pooling and Servicing Percentage Interest: ___%
Agreement and Cut-off Date:
February 1, 2000
First Distribution Date: Aggregate Initial Certificate
March 27, 2000 Principal Balance
of the Class [SB-I][SB-II]
Master Servicer: Certificates:
Residential Funding Corporation [$__________][$__________]
Initial Certificate Principal Balance
of this Certificate:
$---------
Assumed Final Distribution Date: CUSIP: 76110W
- --------------------
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATE
SERIES 2000-KS1
evidencing a percentage interest in the distributions allocable to
the Class [SB-I][SB-II] Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed and adjustable interest rate, first and junior lien mortgage
loans formed and sold by RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Residential Asset Securities
Corporation, the Master Servicer, the Trustee referred to below or GMAC Mortgage
Group, Inc. or any of their affiliates. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental agency
or instrumentality or by Residential Asset Securities Corporation, the Master
Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their affiliates.
None of the Depositor, the Master Servicer, GMAC Mortgage Group, Inc. or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that AUER & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (as specified above) in certain
distributions with respect to the Trust Fund consisting primarily of an interest
in a pool of conventional one- to four-family fixed and adjustable interest
rate, first and junior lien mortgage loans (the "Mortgage Loans"), formed and
sold by Residential Asset Securities Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement
referred to below). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and Bank One, National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing as described in
the Agreement, to the Person in whose name this Certificate is registered at the
close of business on the last day (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the month immediately
preceding the month of such distribution (the "Record Date"), from the related
Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to Holders of Class [SB-I][SB-II]
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will
be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Notional Amount of this Certificate is set forth above. The Notional Amount
hereof will be reduced to the extent of payments of principal on the Group I
Loans and any Realized Losses incurred in respect thereof.
No transfer of this Class [SB-I][SB-II] Certificate will be made unless
such transfer is exempt from the registration requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event that such a transfer is to be
made, (i) the Trustee or the Depositor may require an opinion of counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer is exempt (describing the applicable exemption and
the basis therefor) from or is being made pursuant to the registration
requirements of the Securities Act of 1933, as amended, and of any applicable
statute of any state and (ii) the transferee shall execute an investment letter
in the form described by the Agreement. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer and the Certificate Registrar acting on behalf of
the Trustee against any liability that may result if the transfer is not so
exempt or is not made in accordance with such Federal and state laws.
No transfer of this Class [SB-I][SB-II] Certificate will be made unless
the transferee provides a certification pursuant to Section 5.02(e) of the
Agreement. No transfer of this Certificate or any interest herein shall be made
to any Plan subject to ERISA or Section 4975 of the Code, any Person acting,
directly or indirectly, on behalf of any such Plan or any Person acquiring such
Certificates with "plan assets" of a Plan within the meaning of the Department
of Labor regulation promulgated at 29 C.F.R. ss.2510.3-101 ("Plan Assets")
unless the Depositor, the Trustee and the Master Servicers are provided with an
Opinion of Counsel which establishes to the satisfaction of the Depositor, the
Trustee and the Master Servicers that the purchase of this Certificate is
permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Master Servicers, the Trustee or the Trust Fund to
any obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in the Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Master
Servicers, the Trustee or the Trust Fund. In lieu of such Opinion of Counsel, a
Plan, any Person acting, directly or indirectly, on behalf of any such Plan or
any Person acquiring this Certificate with Plan Assets of a Plan may provide a
certification in the form of Exhibit G-2 to the Agreement, which the Trustee may
rely upon without further inquiry or investigation.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Home Equity Mortgage Asset-Backed Pass-Through
Certificates of the Series specified hereon (herein collectively called the
"Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate Registrar
and any agent of the Depositor, the Master Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Master Servicer
or the Depositor from the Trust Fund of all remaining Group I Loans and Group II
Loans and all property acquired in respect of such Mortgage Loans, thereby
effecting early retirement of the related Certificates. The Agreement permits,
but does not require, the Master Servicer or the Depositor (i) to purchase, at a
price determined as provided in the Agreement, all remaining Group I Loans and
Group II Loans and all property acquired in respect of any Mortgage Loan or (ii)
to purchase in whole, but not in part, all of the Class A-I Certificates or
Class A-II Certificates from the Holders thereof; provided, that any such option
may only be exercised if the aggregate Stated Principal Balance of the Group I
Loans or Group II Loans, as applicable, as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Group I Loans or Group II Loans, as
applicable.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
BY:
Authorized Signatory
Dated: February 28, 2000
Certificate of Authentication
THIS IS ONE OF THE CLASS [ ] Certificates referred to in the
within-mentioned Agreement.
BANK ONE, NATIONAL ASSOCIATION,
as Certificate Registrar
BY:
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Home Equity Mortgage
Pass-Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
Dated:________________ _________________________________________
Signature by or on behalf of assignor
-----------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
FOR THE ACCOUNT OF
ACCOUNT NUMBER ,
OR, IF MAILED BY CHECK, TO:
.
APPLICABLE STATEMENTS SHOULD BE MAILED TO:
.
This information is provided by _________________________, the assignee named
above, or _____________________________________________, as its agent.
<PAGE>
B-9
EXHIBIT B
FORM OF CLASS R CERTIFICATE
THE CLASS [R-I] [R-II] [R-III] CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS
CONSTITUTING THE AVAILABLE DISTRIBUTION AMOUNT UNTIL SUCH TIME AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN (THE "AGREEMENT").
THIS CLASS [R-I] [R-II] [R-III] CERTIFICATE IS SUBORDINATE TO THE CLASS A-I,
A-II, SB-I AND SB-II CERTIFICATES, TO THE EXTENT DESCRIBED HEREIN AND IN THE
AGREEMENT.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON
OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT (THE
"AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE AGREEMENT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE COMPANY AND THE
TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE
AND WILL NOT SUBJECT THE MASTER SERVICER, THE COMPANY OR THE TRUSTEE TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICER
AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE
OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) AN
ELECTING LARGE PARTNERSHIP UNDER SECTION 775 OF THE CODE OR ANY ORGANIZATION
DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (ANY SUCH PERSON DESCRIBED IN
THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN REFERRED TO AS A
"DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2)
NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND
(3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION
IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
<PAGE>
Class [R-I] [R-II] [R-III] Certificate No. 1
Date of Pooling and Servicing Percentage Interest: ___%
Agreement and Cut-off Date:
February 1, 2000 Initial Certificate Principal
Balance of this Certificate: $[ ]
First Distribution Date:
March 27, 2000
Aggregate Initial Certificate
Principal Balance of the Class R
Certificates $[ ]
Master Servicer:
Residential Funding Corporation
Assumed Final Distribution Date:
- --------------
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATE,
SERIES 2000-KS1
evidencing a percentage interest in any distributions allocable to
the Class [R-I] [R-II] [R-III] Certificates with respect to the
Trust Fund consisting primarily of a pool of conventional one-to
four-family fixed and adjustable interest rate, first and junior
lien mortgage loans formed and sold by RESIDENTIAL ASSET SECURITIES
CORPORATION
This Certificate is payable solely from the assets of the Trust Fund and
does not represent an obligation of or interest in Residential Asset Securities
Corporation, the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by
Residential Asset Securities Corporation, the Master Servicer, the Trustee or
any of their affiliates. None of the Depositor, the Master Servicer or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that RESIDENTIAL FUNDING CORPORATION is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of a pool of
conventional one- to four-family fixed and adjustable interest rate, first and
junior lien mortgage loans (the "Mortgage Loans"), formed and sold by
Residential Asset Securities Corporation (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement referred to below).
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as specified above (the "Agreement") among the Depositor, the Master Servicer
and Bank One, National Association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing as described in
the Agreement, to the Person in whose name this Certificate is registered at the
close of business on the last day (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the month immediately
preceding the month of such distribution (the "Record Date"), from the related
Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to Holders of Class [R-I] [R-II]
[R-III] Certificates on such Distribution Date.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Depositor will have the right, in
its sole discretion and without notice to the Holder of this Certificate, to
sell this Certificate to a purchaser selected by the Depositor, which purchaser
may be the Depositor, or any affiliate of the Depositor, on such terms and
conditions as the Depositor may choose.
Notwithstanding the above, the final distribution on this Certificate will
be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Holder of
this Certificate may have additional obligations with respect to this
Certificate, including tax liabilities.
No transfer of this Class [R-I] [R-II] [R-III] Certificate will be made
unless such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended, and any applicable state securities laws or
is made in accordance with said Act and laws. In the event that such a transfer
is to be made, (i) the Trustee or the Depositor may require an opinion of
counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Securities Act of 1933, as amended, and of any applicable
statute of any state and (ii) the transferee shall execute an investment letter
in the form described by the Agreement. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer and the Certificate Registrar acting on behalf of
the Trustee against any liability that may result if the transfer is not so
exempt or is not made in accordance with such Federal and state laws.
No transfer of this Class [R-I] [R-II] [R-III] Certificate will be made
unless the transferee provides a certification pursuant to Section 5.02(e) of
the Agreement. No transfer of this Certificate or any interest herein shall be
made to any Plan subject to ERISA or Section 4975 of the Code, any Person
acting, directly or indirectly, on behalf of any such Plan or any Person
acquiring such Certificates with "plan assets" of a Plan within the meaning of
the Department of Labor regulation promulgated at 29 C.F.R. ss.2510.3-101 ("Plan
Assets") unless the Depositor, the Trustee and the Master Servicers are provided
with an Opinion of Counsel which establishes to the satisfaction of the
Depositor, the Trustee and the Master Servicers that the purchase of this
Certificate is permissible under applicable law, will not constitute or result
in any prohibited transaction under ERISA or Section 4975 of the Code and will
not subject the Depositor, the Master Servicers, the Trustee or the Trust Fund
to any obligation or liability (including obligations or liabilities under ERISA
or Section 4975 of the Code) in addition to those undertaken in the Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Master
Servicers, the Trustee or the Trust Fund. In lieu of such Opinion of Counsel, a
Plan, any Person acting, directly or indirectly, on behalf of any such Plan or
any Person acquiring this Certificate with Plan Assets may provide a
certification in the form of paragraph fourteen of Exhibit F-1 to the Agreement,
which the Trustee may rely upon without further inquiry or investigation.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Home Equity Mortgage Asset-Backed Pass-Through
Certificates of the Series specified hereon (herein collectively called the
"Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders and
the Insurer may be made by the Master Servicer from time to time for purposes
other than distributions to Certificateholders, such purposes including without
limitation reimbursement to the Depositor and the Master Servicer of advances
made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer, the Insurer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional circumstances,
without the consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate Registrar
and the Insurer and any agent of the Depositor, the Master Servicer, the Trustee
or the Certificate Registrar or the Insurer may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor, the Master Servicer, the Insurer, the Trustee nor any such agent
shall be affected by notice to the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Master Servicer
or the Depositor from the Trust Fund of all remaining Group I Loans and Group II
Loans and all property acquired in respect of such Mortgage Loans, thereby
effecting early retirement of the related Certificates. The Agreement permits,
but does not require, the Master Servicer or the Depositor (i) to purchase, at a
price determined as provided in the Agreement, all remaining Group I Loans and
Group II Loans and all property acquired in respect of any Mortgage Loan or (ii)
to purchase in whole, but not in part, all of the Class A-I Certificates or
Class A-II Certificates from the Holders thereof; provided, that any such option
may only be exercised if the aggregate Stated Principal Balance of the Group I
Loans or Group II Loans, as applicable, as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Group I Loans or Group II Loans, as
applicable.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
BY:
Authorized Signatory
Dated: February 28, 2000
Certificate of Authentication
THIS IS ONE OF THE CLASS [ ] Certificates referred to in the
within-mentioned Agreement.
BANK ONE, NATIONAL ASSOCIATION,
as Certificate Registrar
BY:
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Home Equity Mortgage
Pass-Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund. I (We)
further direct the Certificate Registrar to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:________________ _________________________________________
Signature by or on behalf of assignor
-----------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
FOR THE ACCOUNT OF
ACCOUNT NUMBER ,
OR, IF MAILED BY CHECK, TO:
.
APPLICABLE STATEMENTS SHOULD BE MAILED TO:
.
This information is provided by _________________________, the assignee named
above, or _____________________________________________, as its agent.
<PAGE>
C-1
EXHIBIT C
COPY OF CUSTODIAL AGREEMENT
<PAGE> 